Small businesses are taking a stand against tariffs that have impacted their operations for years. A federal appeals court is now considering whether these businesses can challenge the constitutionality of former President Donald Trump’s tariff actions on steel and aluminum imports. This legal battle could reshape how trade policy is implemented in the future.
The lawsuit, filed by the American Institute for International Steel and two small companies, argues that Section 232 of the Trade Expansion Act gives too much power to the president. They claim this violates the Constitution’s separation of powers. The law allows the president to impose import restrictions based on national security concerns.
“These tariffs have devastated our business,” says Mark Zekelman, owner of a metal fabrication shop in Ohio. “Our costs went up overnight, but we couldn’t raise prices fast enough to cover them.” His company, which employs 27 people, saw profit margins shrink by almost 40% after the tariffs took effect.
The case reached the U.S. Court of Appeals for the Federal Circuit after previous dismissals. The Supreme Court declined to hear it in 2020, sending it back to lower courts. Now, the three-judge panel must decide if the plaintiffs have legal standing to pursue their claims.
During oral arguments, Judge Timothy Dyk questioned whether the court should defer to Congress on trade matters. Judge Richard Taranto wondered if the law contained sufficient guidelines to limit presidential discretion. The government’s attorney defended the tariffs as properly enacted under congressional authority.
Section 232 tariffs have remained in place through both the Trump and Biden administrations. The 25% tariff on steel and 10% tariff on aluminum imports were justified as protecting domestic production capacity deemed vital for national defense. However, many economists dispute this rationale.
Research from the Federal Reserve Bank of New York suggests these tariffs cost American consumers approximately $900,000 per job saved in the metals industry. The Peterson Institute for International Economics estimates the total economic impact exceeds $7.2 billion annually.
Small business advocates point out that while large corporations can absorb or pass on increased costs, smaller firms often cannot. “We operate on tight margins already,” explains Jennifer Diaz, who runs a construction supply company in Florida. “When our material costs jumped 20%, we had to lay off three employees.”
The lawsuit represents an unusual alliance between free-trade advocates and small business owners. Both groups argue that executive branch tariff authority should have clearer limits and congressional oversight. They point to the Constitution’s clear statement that “Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises.”
If successful, the lawsuit could force a restructuring of how trade policy is implemented. Congress might need to draft more specific guidelines for when and how presidents can impose tariffs. This would potentially create more predictable trade conditions for businesses of all sizes.
Trade policy experts note that similar tariff challenges have rarely succeeded in court. “The judiciary has historically given wide latitude to the political branches on trade matters,” says William Reinsch of the Center for Strategic and International Studies. “But this case raises legitimate constitutional questions that deserve consideration.”
The timing of this case is particularly significant as campaign season approaches. Trade policy remains a divisive issue, with some candidates advocating for even broader tariff powers while others support more open trade. Small businesses find themselves caught in the middle of this policy debate.
The court is expected to issue its ruling later this year. Regardless of the outcome, the case highlights how trade decisions made in Washington have real consequences for small business owners across America. Their voices are increasingly important in shaping how the nation balances economic and security concerns in its trade policy.
For now, companies affected by these tariffs continue to adapt their business strategies while watching the legal proceedings closely. The resolution of this case could determine whether presidential tariff powers expand further or face new constitutional constraints in the years ahead.
