Context:

President Donald Trump's 'Liberation Day' tariffs, which propose a 10% baseline tariff on all countries and higher, reciprocal tariffs on select nations, are facing legal scrutiny. The Court of Appeals for the Federal Circuit is set to hear arguments regarding the legality of using the International Emergency Economic Powers Act (IEEPA) to impose these tariffs. Small businesses argue that the tariffs introduce market volatility and operational uncertainty, while the Trump administration defends them as necessary for national security and economic balance. A lower court previously blocked the tariffs, citing the president's limited authority under the emergency law, but this decision was paused pending the appeal. The outcome is expected to move quickly, with both sides prepared to escalate to the Supreme Court if necessary, amid concerns of potential harm to U.S. businesses during the legal proceedings.

Dive Deeper:

• President Trump announced a sweeping tariff plan on April 2, 2025, aiming to address trade imbalances and boost domestic manufacturing by imposing a 10% baseline tariff on all countries, along with higher tariffs on selected nations like China.

• The legality of these tariffs is under examination by the Court of Appeals for the Federal Circuit, focusing on Trump's use of the International Emergency Economic Powers Act (IEEPA), a 1977 law intended for addressing national emergencies, to justify these tariffs.

• Small U.S. businesses, represented in the case V.O.S. Selections Inc. v. Trump, argue that the tariffs have created market volatility and operational uncertainty, claiming they face unpredictable changes in tariff rates, which complicates their business operations.

• A three-judge panel from the U.S. Court of International Trade initially blocked the tariffs, ruling that the president cannot impose tariffs under the emergency law without explicit authority, though this decision was put on hold by an appeals court.

• U.S. Attorney General Pam Bondi supports the tariffs, arguing they protect national security and address trade deficits, while critics see them as a negotiation tactic to bring trading partners to the table.

• The court's decision is expected soon, with both parties ready to take the matter to the Supreme Court if necessary, amid concerns that prolonged legal battles could inflict lasting harm on small businesses.

• Despite claims from trade advisers and President Trump of numerous trade deals, the administration has reportedly finalized only eight agreements in recent months, primarily with major trade partners like the EU, UK, and Japan.