Trump trade war faces legal challenge as businesses, states argue his tariffs exceeded his power

WASHINGTON — President Donald Trump is waging a trade war without getting approval from Congress: He declared a national emergency to slap import taxes — tariffs — on almost every country on earth.

The president is now facing at least seven lawsuits that argue he's gone too far and asserted power he does not have.

A three-judge panel of the U.S. Court of International Trade, which deals specifically with civil lawsuits involving international trade law, held the first hearing on the challenges Tuesday morning in New York. Five small businesses are asking the court to block the sweeping import taxes that Trump announced April 2 – ''Liberation Day,'' he called it.

Declaring that the United States' huge and long-running trade deficits add up to a national emergency, Trump invoked the 1977 International Emergency Economic Powers Act (IEPPA) and rolled out 10% tariffs on many countries. He imposed higher– up to 50% -- ''reciprocal'' tariffs on countries that sold more goods to the United States than the U.S. sold them. (Trump later suspended those higher tariffs for 90 days.)

Trump's tariffs rattled global markets and raised fears that they would disrupt commerce and slow U.S. and global economic growth.

Jeffrey Schwab, senior counsel and director of litigation at the nonprofit Liberty Justice Center, said the president is exceeding the act's authority. ''That statute doesn't actually say anything about giving the president the power to tariff,'' said Schwab, who is representing the small businesses. ''It doesn't say the word tariff.''

In their complaint, the businesses also call Trump's emergency ''a figment of his own imagination: trade deficits, which have persisted for decades without causing economic harm, are not an emergency.'' The U.S. has, in fact, run a trade deficit – the gap between exports and imports – with the rest of the world for 49 straight years, through good times and bad.

But the Trump administration argues that courts approved President Richard Nixon's emergency use of tariffs in a 1971 economic crisis. The Nixon administration successfully cited its authority under the 1917 Trading With Enemy Act, which preceded and supplied some of the legal language used in IEPPA.

The legal battle against Trump's tariffs has created unusual bedfellows, uniting states led by Democratic governors with libertarian groups – including the Liberty Justice Center – that often seek to overturn government regulation of businesses. A dozen states have filed suit against Trump's tariffs in the New York trade court. A hearing in that case is scheduled for May 21.

Kathleen Claussen, a professor and trade-law expert at Georgetown Law, said Tuesday's hearing and another scheduled for the states' lawsuit in the coming weeks will likely set the tone for legal battles over tariffs to come. If the court agrees to block the tariffs under the emergency economic-powers act, the Trump administration will certainly appeal. ''It strikes me probably this probably is something that has to be decided by the Supreme Court,'' she said.

And if the cases do go to the Supreme Court, legal experts say, it's possible the justices will use conservative legal doctrines they cited to rein in government powers claimed by Democratic President Joe Biden administration to strike down or limit tariffs imposed by Trump, a Republican.

The U.S. Constitution gives the power to impose taxes — including tariffs — to Congress. But over the years lawmakers ceded power over trade policy to the White House, clearing the way for Trump's expansive use of tariffs.

Some lawmakers now want to reclaim some of the authority they've given up.

Republican Sen. Chuck Grassley of Iowa and Democratic Sen. Maria Cantwell of Washington, for instance, have introduced legislation that would require presidents to justify new tariffs to Congress. Lawmakers would then have 60 days to approve the tariffs. Otherwise, they would expire.

But their proposal appears to stand little chance of becoming law, given most Republican lawmakers' deference to Trump and the president's veto power. "That train has left the station,'' said trade lawyer Warren Maruyama, who was general counsel for the Office of the U.S. Trade Representative in the administration of President George W. Bush.

For now, many American businesses are struggling to cope with Trump's tariffs, which have lifted America's average tariff to the highest level since 1934 — even after a trade truce with China was announced Monday, according to Yale University's Budget Lab.

Victor Schwartz of New York City has spent the last 39 years building a business importing wine and spirits from small producers across the world. The tariffs are hitting his business hard. His customers want regional wines from around the world, so he can't just shift to American vintages. And the state requires him to post prices a month in advance so it's tough to keep up with Trump's ever-changing tariffs.

His business — V.O.S. Selections — is one of the five plaintiffs in Tuesday's hearing. ''It's a race against time,'' he said. ''Will we get through it? I'm not sure exactly.''