Two small businesses filed a federal lawsuit Monday against the Trump administration, seeking to block a new round of 10 percent global tariffs just weeks after the Supreme Court struck down the president’s first tariff regime.
The case, Burlap and Barrel, Inc. v. Trump, was filed in the U.S. Court of International Trade by Burlap & Barrel, a Brooklyn-based spice importer that sources single-origin spices directly from smallholder farmers, and Basic Fun Inc., a Florida toy company that owns the rights to Care Bears, Tonka Trucks, and Lincoln Logs. The legal nonprofit Liberty Justice Center is representing both plaintiffs.
“Sudden global tariffs make it harder for us to operate, harder for our partners to sell their crops, and more expensive for American families,” said Ethan Frisch, co-founder of Burlap & Barrel. The lawsuit marks the first private legal challenge to the administration’s new tariff strategy and follows a separate multistate suit filed the week of March 2 by a coalition of 24 state attorneys general on similar grounds.
The Legal Battle Over Section 122
The new tariffs are being imposed under Section 122 of the Trade Act of 1974, a statute the administration turned to after the Supreme Court ruled 6-3 on February 20, 2026 that prior tariffs imposed under the International Emergency Economic Powers Act exceeded presidential authority. In that ruling, Chief Justice John Roberts wrote that the president’s reading of IEEPA as a tariff authority “cannot bear such weight.”
With IEEPA tariffs invalidated, the Trump administration pivoted to Section 122, which permits the president to impose temporary import restrictions during periods of large and serious balance-of-payments deficits or currency crises. The plaintiffs argue that the current U.S. trade deficit does not meet that legal threshold.
Liberty Justice Center contends that Section 122 was designed to address monetary emergencies, not routine trade deficits, and that its use is further precluded by the fact that the United States has operated on a floating exchange rate since the early 1970s. The lawsuit argues that no qualifying “large and serious balance-of-payments deficit” currently exists under the law’s own terms.
Who the Tariffs Hit
Burlap & Barrel and Basic Fun represent a broad cross-section of small importers affected by the tariffs. Burlap & Barrel works directly with farming communities in countries including Ethiopia, Turkey, and Sri Lanka, and a 10 percent tariff on all imports raises costs at the point of entry without any recourse to renegotiate long-standing supplier relationships. Basic Fun imports a significant share of its products from factories in China and other manufacturing hubs.
For businesses like these, the impact is direct and immediate. Unlike large corporations with diversified supply chains and long-term hedging arrangements, small importers typically cannot absorb sudden cost increases or quickly shift sourcing to domestic suppliers. GreyJournal has previously reported on how Trump’s tariffs are squeezing U.S. small businesses across manufacturing, retail, and food sectors.
A Second Attempt After a Supreme Court Loss
The administration’s pivot to Section 122 came rapidly after the February 20 Supreme Court ruling. The court’s decision in Learning Resources, Inc. v. Trump was a significant legal setback, invalidating not only tariffs targeting Canada, Mexico, and China tied to drug enforcement emergencies but also broader global tariffs premised on the U.S. trade deficit. The ruling left an estimated $200 billion in tariff payments already collected with an unresolved question about whether refunds would be required.
The administration has not indicated how long the Section 122 tariffs would remain in effect, or whether it plans to seek other statutory authorities to maintain broad import taxes. The Liberty Justice Center, which also participated in litigation leading to the IEEPA ruling, has indicated it will press for a swift decision.
What Comes Next
The U.S. Court of International Trade, which handles trade-related cases at the federal level, now has two active challenges to the new tariff regime before it: the 24-state lawsuit filed in early March and this newly filed private case. Legal analysts have noted that the administration’s legal footing under Section 122 is narrower than its IEEPA position, given the statute’s explicit focus on balance-of-payments conditions rather than general trade deficits.
The outcome will have direct consequences for thousands of small businesses that import components, finished goods, or raw materials. For founders navigating the uncertainty, trade policy volatility has become a supply chain planning problem as much as a legal one. GreyJournal has covered how shifting trade conditions are forcing entrepreneurs to rethink their international business playbooks.
The full text of the lawsuit and the Liberty Justice Center’s press release are available at libertyjusticecenter.org. The Supreme Court’s February 20 ruling is available through SCOTUSblog.
