A group of states and small businesses separately asked an appeals court to dump President Donald Trump’s “Liberation Day” tariffs while legal challenges play out.
The two groups argued in motions filed this week that they face irreparable harm if the tariffs remain. The states said the tariffs will cost them $1.6 billion per year through higher prices. The businesses said they could lose everything, including their businesses. A refund, their attorneys said, doesn’t help a bankrupt company.
Trump’s team has argued the tariffs should remain in place while the legal challenges proceed.
“The injunction threatens to unwind months of foreign policy decision-making and sensitive diplomatic negotiations, at the expense of the Nation’s economic well-being and national security,” DOJ attorneys wrote.
The DOJ also said suspending the tariffs would disable the president amid “time-sensitive negotiations with multiple foreign countries over future trade agreements.” They further warned of “immediate, catastrophic harms that would flow from enjoining the President’s tariff authority.”
The businesses, represented by the Liberty Justice Center, said their livelihood is on the line. The businesses included VOS Selections, a New York-based wine and spirit importer.
“An eventual refund is of little comfort to the VOS Plaintiffs, who face imminent irreparable harm, including existential threats of bankruptcy and permanent damage to their business, whether by reputational damage, loss of goodwill, or harm to relationships with suppliers and customers,” Liberty Justice Center attorneys wrote. “What good is a refund of the tariffs paid to a business that is bankrupt and no longer exists?”
The Liberty Justice Center attorneys noted: “Small businesses are particularly vulnerable, as they are less equipped to absorb these extra costs. Close to two-thirds of small businesses have reported that tariffs and other trade issues would hurt their businesses.”
The states, led by Oregon’s attorney general, presented a similar argument.
“Once they pass the tariff costs on to the States through higher prices, the States likely cannot recover those costs even if the vendors ultimately receive refunds,” the attorneys general wrote. “That is not a trivial sum: The plaintiff States’ annual losses are conservatively estimated at $1.6 billion per year.”
The states also said the government’s claims of harm lacked a legal basis.
“But even if the President’s negotiating position were somehow harmed by the ruling below, that would not justify a stay,” the attorneys general wrote. “The President tried to exercise authority that he does not have.”
Liberty Justice Center said Trump’s problems were of his own making. The nonprofit law firm’s attorneys further argued that Trump has other options for imposing tariffs and conducting foreign policy.
“The President has legitimate means of conducting foreign policy; imposing illegal tariffs is not one of them,” Liberty Justice Center attorney Jeffrey Schwab wrote. “The President cannot act illegally as a matter of policy convenience, be ordered to stop, and then plead prior reliance on his illegal acts.”
A judge ordered the government to file a reply regarding the stay on Monday.
On April 2, dubbed “Liberation Day” by the president, Trump announced reciprocal tariffs on scores of other nations, but suspended those higher rates for 90 days while his trade team went to work. Since then, Trump’s team has announced a limited trade deal with the United Kingdom and a tariff truce with China while talks continue.
Those “Liberation Day” tariffs face legal challenges from states and small businesses.
A three-judge panel on the U.S. Court of International Trade unanimously ruled last week that Congress did not give the president tariff authority under the International Emergency Economic Powers Act of 1977. The court gave Trump 10 days to unwind all the tariffs he issued under IEEPA. The administration appealed that decision and asked for an emergency stay. The appeals court granted that request, putting the Court of International Trade ruling on hold while the appeal continues.
Economists, businesses and some publicly traded companies have warned that tariffs could raise prices on a wide range of consumer products.
Trump has said he wants to use tariffs to restore manufacturing jobs lost to lower-wage countries in decades past, shift the tax burden away from U.S. families, and pay down the national debt.
A tariff is a tax on imported goods paid by the person or company that imports the goods. The importer can absorb the cost of the tariffs or try to pass the cost on to consumers through higher prices.
