Although the case is limited to two businesses that sued, the decision could open the floodgates to further litigation from other companies.
A federal judge in Washington, D.C., blocked President Donald Trump from enacting tariffs on two Illinois companies, a day after a separate federal court halted Trump’s ability to unilaterally impose tariffs on countries worldwide.
D.C. District Judge Rudolph Contreras ruled that Trump could not enact wide ranging tariffs under the International Emergency Economic Powers Act of 1977, one day after the Court of International Trade came to the same conclusion.
“[T]he International Economic Emergency Economic Powers Act does not authorize the President to impose the tariffs set forth in the above-listed orders,” Contreras said in his ruling.
Contreras, an Obama appointee viewed as a moderate Democrat, declared Trump’s tariffs “unlawful” in a preliminary injunction for a case involving American toy company Learning Resources and another small business.
Although the case is limited to the two businesses that sued, Contreras’s decision could open the floodgates to further litigation from other companies seeking relief from Trump’s tariffs.
“This case is not about tariffs qua tariffs. It is about whether IEEPA enables the President to unilaterally impose, revoke, pause, reinstate, and adjust tariffs to reorder the global economy. The Court agrees with Plaintiffs that it does not. For the reasons discussed below, the Court denies Defendants’ motion to transfer and grants Plaintiffs’ motion for a preliminary injunction,” Contreras said in an opinion accompanying his order.
The Trump administration unsuccessfully sought to have the case transferred to the Court of International Trade, arguing it had sole jurisdiction to address the president’s tariffs.
Contreras’s ruling spares the companies from the impacts of Trump’s “liberation day” suite of tariffs on nations worldwide and Trump’s various tariffs on China. His ruling comes days after he held a highly anticipated hearing where attorneys on both sides of the case presented their arguments.
Learning Resources specifically challenged Trump’s tariffs on China because they pose an existential threat to the family-owned company’s business.
“The way this was implemented with almost no notice was catastrophic. And we felt we were prepared,” Learning Resources CEO Rick Woldenberg told National Review in an interview.
“I don’t think [Trump] could have come up with a plan that could have made it more difficult on us. I think he’s pressed every button to make it as difficult as possible,” he added.
“You have a synchronous crisis across a marketplace comprised of the number one economy doing business with the number two economy. Everyone’s rushing for the exit at the same time, so clearly not everyone’s going to get out the door at the same time. And you have massive, massive imbalances.”
Years ahead of Trump’s tariffs, Learning Resources attempted to move some of its production to other countries in preparation for potential tariffs. The company moved hundreds of items, roughly 16 percent of its business, away from China ahead of time and absorbed the expenses affiliated with it.
But, Trump’s “liberation day” levies apply to most nations around the globe and were set to begin immediately, giving businesses nowhere to go for relief and no time to adjust to the changing economic reality.
Woldenberg, a third generation business owner, employs three of his kids in the business and hopes it lives on through his family. The Illinois-based company is over 100 years old and makes education toys primarily for toddlers.
Under Trump’s tariff package, Woldenberg’s company would have to pay a $100 million tariff bill, forcing them to cut costs. Woldenberg refuses to commit “business suicide” by dramatically raising prices and losing customers his company has acquired over the course of generations. During the litigation, Woldenberg provided a sworn declaration explaining why his company cannot feasibly move all of its manufacturing capacity to the U.S. from China, as some critics would urge him to do.
Several Trump administration officials submitted affidavits for the Learning Resources case arguing Trump’s tariffs were necessary for national security purposes. Secretary of State Marco Rubio, Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Advisor Jamieson Greer all submitted declarations for the Learning Resources case that were previously used in another Court of International Trade case.
In a separate case, the Court of International Trade similarly applied its judgement to all of Trump’s tariffs in a case involving two sets of plaintiffs, a group of small businesses and a coalition of states.
“The judicial coup is out of control,” Trump policy advisor Stephen Miller posted on X Wednesday evening. Trump and his allies have routinely criticized federal judges for perceived overreach in blocking aspects of Trump’s agenda. An appeals court has paused the Court of International Trade’s ruling for the time being while the federal government appeals it.
“The president’s rationale for imposing these powerful tariffs was legally sound and grounded in common sense,” White House press secretary Karoline Leavitt told reporters.
“Three judges of the U.S. Court of International Trade disagreed and brazenly abused their judicial power to usurp the authority of President Trump to stop him from carrying out the mandate that the American people gave him. These judges failed to acknowledge that the president of the United States has core foreign affairs powers and authority given to him by Congress to protect the United States economy and national security,” Leavitt added.
Prior to Trump’s tariffs, the IEEPA had never been invoked to justify the imposition of tariffs through executive action. The emergency law allows the president to take emergency actions against foreign threats, including embargoes and sanctions, but it does not apply to domestic policy.
Trump announced in April a sweeping tariff package on numerous countries worldwide, immediately causing panic among Wall Street investors and businesses. Following a sustained market panic, Trump announced a 90-day pause on the tariffs, but continued a tit-for-tat tariff escalation with China. Trump raised tariff rates on China to 145 percent and repeatedly said he would not lower them as China promised to fight a trade war as long as possible.
Before that, Trump tariffed China 25 percent with the intention of pressuring it into doing more to prevent fentanyl from flowing out of the country and eventually across the U.S. southern border. The Trump administration believes tariffs are necessary to end decades of unfair trade practices against the U.S. and to revitalize U.S. manufacturing. Many economists and financial analysts believe tariffs function as a tax on consumers and businesses, and will raise prices across the board.
Earlier this month, the U.S. and China suspended tariffs for 90 days as the world’s largest economies continue negotiating a trade deal. For the time being, U.S. tariffs on Chinese imports will be 30 percent, and China’s tariff on American imports will be 10 percent.