Oops! Small businesses finally round up against Donald Trump as years of unpaid invoices come due with interest

Donald Trump‘s broad tariff strategy is playing out in U.S. federal courts, just days after the president praised a major trade deal with the European Union and as new import taxes are about to take effect.

The foundation of Trump’s approach, his use of emergency powers, is now under serious legal threat. On Thursday, the U.S. Court of Appeals for the Federal Circuit will hear arguments in a key case, VOS Selections v. Trump, a lawsuit brought by a group of small business owners.

According to The Guardian, these business owners are challenging the president’s power to impose heavy tariffs, arguing that such moves lack proper legal support from Congress and could badly hurt their finances. The Trump administration has defended its right to apply these taxes by pointing to the International Emergency Economic Powers Act (IEEPA) of 1977.

The administration claims that various national emergencies, including ongoing U.S. trade deficits with other countries and the widespread problem of fentanyl trafficking, require quick and strong action through tariffs. However, the plaintiffs strongly disagree, stating that the IEEPA was never meant to give the president tariff power and has never been used that way in its nearly 50-year history. This deep disagreement over the IEEPA’s purpose and limits is the core of the legal battle.

Trump may soon lose his powers all at once

The result of this case could seriously disrupt or even dismantle Trump’s biggest tariff deals and ongoing negotiations, which he has made a central part of his second-term plans. Given how much is at stake, legal experts widely expect this case to eventually reach the U.S. Supreme Court, where the current 6-3 conservative majority would decide its fate. For now, this legal challenge under the IEEPA threatens Trump’s hopes of claiming victory on tariffs.

His controversial strategy of slapping high import taxes on major trade partners continues to shake up global trade and financial markets. The court case follows a recent agreement made in Scotland between Trump and European Commission leader Ursula von der Leyen, which will impose 15% tariffs on most EU goods entering the U.S. Adding to the tension, another round of potentially disruptive tariffs is set to start on Friday, just one day after the appeals court hears arguments.

These new tariffs target some of the biggest suppliers of U.S. imports, including neighboring countries like Canada and Mexico. This isn’t the first time Trump’s tariff plans have faced legal trouble. A federal court ruled in May that the president had overstepped his authority under trade laws, calling his tariff move illegal.

That ruling was later put on hold by the same appeals court now handling VOS Selections v. Trump, pending a final decision. This earlier legal loss shows how the administration’s trade policies keep running into judicial roadblocks.