Lawsuit Could End Trump Tariffs And Stock Market Rout

A new lawsuit aims to end the Trump administration’s sweeping tariffs by arguing the president’s use of emergency powers is unlawful. When Donald Trump signed an order to impose sweeping tariffs on countries worldwide, he did not use traditional trade law. Instead, Trump claimed authority under the International Emergency Economic Powers Act. However, no president has ever used that law to impose tariffs. If the new lawsuit or other legal actions succeed, the massive tariffs the Trump administration imposed on imports worldwide could largely disappear and provide relief for consumers, companies and investors.

Trump Tariffs Unleash Financial Carnage On Wall Street

On April 2, 2025, Donald Trump enacted tariff levels that guaranteed American consumers and companies would pay higher prices for many products and the intermediate goods used to make products. Investors anticipated the tariffs would harm company earnings and lead to slower growth in the United States and elsewhere.

“President Trump put up a wall between the U.S. economy and the rest of the world, and the market tanked. And then the market tanked again,” reported the Wall Street Journal. “The message from Wall Street’s epic two-day rout, which destroyed $6.6 trillion in market value: There is nowhere to hide from Trump’s steep tariffs on goods imported from nearly every corner of the planet.”

Among the first countries to retaliate was China. The Chinese government announced higher tariffs on U.S. goods, including farm products. That will likely lead the Trump administration to address a political problem, as it did in 2020, by spending billions of dollars in taxpayer money to compensate American farmers through the Commodity Credit Corporation. Congress did not create the CCC for that purpose.

Trump Tariffs Authorized By Unprecedented Use Of Emergency Powers Law

When Donald Trump imposed tariffs on nearly every country, he signed an executive order using a novel authority: “By the authority vested in me as President by the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act. . . I, DONALD J. TRUMP . . . find that underlying conditions, including a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and U.S. trading partners’ economic policies that suppress domestic wages and consumption, as indicated by large and persistent annual U.S. goods trade deficits, constitute an unusual and extraordinary threat to the national security and economy of the United States.”

Section 1701 of the International Emergency Economic Powers Act states, “Any authority granted to the President . . . may be exercised to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat.”

While the statute notes, “The authorities granted to the President . . . may only be exercised to deal with an unusual and extraordinary threat with respect to which a national emergency has been declared for purposes of this chapter and may not be exercised for any other Purpose,” it gives the president discretion to define “a national emergency” and “an unusual and extraordinary threat.”

The Trump administration used the IEEPA because it provides more unilateral authority to the president to impose tariffs than U.S. trade law permits.

Lawsuit Argues Trump Tariffs Are Unconstitutional

On April 3, 2025, the New Civil Liberties Alliance filed a complaint for injunctive and declaratory relief challenging the Trump administration’s use of the International Emergency Economic Powers Act. The lawsuit is on behalf of Simplified, a Pensacola-based company that imports goods from China and expects to pay higher tariffs because of the president’s executive order.

“Presidents can impose tariffs only when Congress grants permission, which it has done in carefully drawn trade statutes,” according to the complaint. The statutes limit the conditions and scope of the tariffs. “President Trump is attempting to bypass these constraints by invoking the IEEPA. But in the IEEPA’s almost 50-year history, no previous president has used it to impose tariffs. Which is not surprising, since the statute does not even mention tariffs, nor does it say anything else suggesting it authorizes presidents to tax American citizens.”

The complaint provides four primary reasons why the president’s recent tariff actions using the International Emergency Economic Powers Act are unlawful.

First, “[The] IEEPA does not authorize a president to impose tariffs. Basic tools of statutory construction dictate this conclusion.” The complaint argues, “Because the Executive Orders present a question of ‘vast economic and political significance,’ the major questions doctrine requires the President to show that the IEEPA ‘clearly’ authorizes him to impose tariffs. The President cannot make that showing.”

Second, “the China Executive Orders are ultra vires because the President has not—and cannot—meet the IEEPA requirement that he show the tariffs are ‘necessary’ to address the stated ‘emergency’ of illegal opioids.”

Third, “if IEEPA permits the China Executive Orders, then this statute violates the nondelegation doctrine because it lacks an intelligible principle that constrains a president’s authority. In that case, the IEEPA is unconstitutional because it delegates Congress’s prerogative to tax and to regulate commerce with foreign nations.”

Fourth, “the resulting modifications made to the HTSUS [Harmonized Tariff Schedule of the United States] violate the Administrative Procedure Act because they are contrary to law.”

Kathleen Claussen, a law professor at Georgetown University, said on the Trade Talks podcast, “Courts may not be happy with the far reach of the emergency, that this is so broad. This is so vast. This is clearly not what Congress intended in passing the statutes on which the president is now relying.” She notes that the IEEPA does not contain the word “tariff.” Claussen added, “And so perhaps, this use of tariffs again, a court will think has gone too far. But again, by and large, so far what we’ve seen is a lot of deference from the courts on these sorts of matters.”

Donald B. Cameron, Jr., senior counsel in the international trade practice at Morris, Manning & Martin, believes the lawsuit has merit. “It is saying that the administration concocted a reason to invoke the provision, and if this is lawful, then the Executive, not Congress, controls tariffs since the reason is transparently made up.” He said the New Civil Liberties Alliance makes a good statutory argument as to why the statute does not, on its face, permit tariffs as a remedy. “It will be interesting to see what the court will do, but this is a good complaint.”

Trade experts note Congress could wrestle back its authority over tariffs, even though few believe many Republicans would buck Donald Trump on an issue so central to his presidency. The complaint directly concerns tariffs on goods from China. If successful, the lawsuit or others could expand to address tariffs levied on goods from other countries using the International Emergency Economic Powers Act.