A lawsuit brought by two small businesses allege that argued that the Trump administration has misused the law in its attempt to recreate the same system of duties that judges had already ruled illegal.

The case challenging the new swathe of tariffs introduced on July 24, which was brought on the same day, touches off another legal battle that could redefine President Trump’s powers to wage a global trade war, reports The New York Times.

The plaintiffs in the case are Burlap and Barrel, a New York spice retailer, and Collective Horology, a California seller of watches, and are represented by the Liberty Justice Center, a legal group that has successfully challenged Trump’s tariffs in the past.

The previous tariffs found by the Supreme Court in February 2026 to be illegal were brought under the International Emergency Economic Powers Act (IEEPA). This latest round has been introduced under Section 301 of the Trade Act of 1974, which gives the president the power to impose punitive tariffs after official investigations into trading partners’ practices deem them to be unfair, and therefore harmful to domestic producers. 

Read More: Trump Rebuilds Tariffs With New Levies on 60 Economies

The general agreement is that Section 301 puts the Trump administration on firmer legal ground; the president’s use of Section 301 to impose duties on Chinese goods during his first term survived several court challenges.

But, says the Times, small businesses argue that Trump has stretched the statute beyond its limit this time, pointing to the way his administration conducted its investigations — and the fact that it had indicated it planned to impose tariffs even before its Section 301 reviews concluded.

“Those statements, in combination with the timing, scope and rate structure of the final action, support the inference that the Section 301 tariffs, by design, replace the invalidated global tariff regime rather than constitute measures selected to obtain elimination of identified economy-specific practices,” the business owners argued in their lawsuit.