Businesses, conservative lawyers planning legal challenge to Trump’s tariffs
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(WASHINGTON) — A group of business groups and conservative lawyers are preparing a legal challenge to President Donald Trump’s tariffs, arguing he does not have the legal authority to impose them.
Sources familiar with the effort say they are preparing to file the challenge in the coming weeks, possibly as soon as this Friday.
One prominent legal figure close to Trump told ABC News there is “a very good chance” the U.S. Supreme Court would find Trump’s tariffs unconstitutional.
The issue is this: Congress, not the president, has the power to impose taxes and regulate trade. In imposing these tariffs, President Trump cited the 1977 International Emergency Economic Powers Act (IEEPA), which gives the the president power to regulate international commerce in the event of a national emergency.
But the IEEPA — which specifically cites the power to impose sanctions and seize foreign assets — does not mention tariffs. And, even if one argues the right to impose tariffs is implied, it’s not clear what “national emergency” could justify the imposition of global tariffs.
“There is a strong argument that the tariffs imposed under the IEEPA are not legal or constitutional,” a prominent conservative lawyer close to President Trump told ABC News. “Under that particular statute, tariffs are not listed amongst the various actions a president can take in response to the declaration of a nation emergency.”
The lawyer adds: “And when you combine that with the fact that Article 1, Section 8 [of the Constitution] clearly gives Congress the power to impose duties — tariffs — I think those two things in combination raise a very, very serious legal question.”
Another conservative lawyer familiar with the expected legal challenge to Trump’s tariffs predicted the Supreme Court would rule 9-0 against the administration if it reaches the high court.
A lawsuit has already been filed against the 20% sanctions Trump imposed on China earlier this year. The White House cited the IEEPA in imposing those tariffs as well, and the president said they were in response to China’s failure to stop the flow of fentanyl into the United States.
The suit was filed in a federal court in Florida last week by The New Civil Liberties Alliance, a conservative legal, on behalf of a Florida-based paper company called Simplified.
Trump’s tariffs are the first time a president has attempted to impose global tariffs by citing the IEEPA. The steel and aluminum tariffs Trump imposed on China during his first term where narrower and done under a different congressional authorization. But that act doesn’t specifically give the president the authority to impose tariffs — and it’s not clear what the emergency is that would justify his actions under the law.
Tariffs have never previously been imposed under the emergency power Trump is using here. The tariffs he imposed in his first term (and President Joe Biden’s tariffs, too) were imposed citing different congressional authorizations.
(WASHINGTON) — House Republicans are plowing ahead Tuesday to advance key components of their bill to fund President Donald Trump’s agenda — including taxes and Medicaid cuts — even as they remain at odds over several critical issues.
Sources tell ABC News that dueling, dramatic hearings are expected to drag deep into the night and into Wednesday as Democrats try to challenge Republicans’ efforts to write those sections of Trump’s “big, beautiful bill.”
Democratic members of the House Energy and Commerce Committee, which has jurisdiction over energy and health care programs, plan to offer several doomed amendments and might try an unusual move of calling impromptu witnesses to testify about how Medicaid impacts their life. Republicans are likely to block both efforts.
Dozens of people in wheelchairs chanting “No cuts to Medicaid!” tried to block the doors of the Energy and Commerce markup before it began and were blocked by Capitol Police. Several were arrested.
The markup in the House Ways and Means Committee, which has jurisdiction over taxes, is also expected to slide into the night amid an internal GOP battle over caps to the State and Local Tax deduction. Democrats are expected to trash the bill as a massive break for the wealthiest taxpayers.
While the GOP plan proposes massive cuts to Medicaid, it does not include some of the most drastic cuts that Republican hardliners were pushing for, putting its passage in flux amid a conservative revolt.
Texas Republican Rep. Chip Roy said Monday he’s opposed to the proposals and needs “significant” changes to support the final package.
“I remain open-minded because progress has been made based on our forceful efforts to force change. But we cannot continue down the path we’ve been going down – and we will need SIGNIFICANT additional changes to garner my support,” he said in a post on X.
Asked on Tuesday if he was worried about members like Roy getting behind the bill,” House Speaker Mike Johnson responded, “No one is going to get 100 percent of what we want. Chip is one of my best friends. We communicated within the last hour, and we’ll talk again today. I think we get everybody to yes.”
Trump has repeatedly promised to not cut Medicaid and he and Republicans said they’ll come up with savings by cutting waste and fraud in the program.
Before heading off on a four-day trip to the Middle East on Monday, he urged Republicans to “UNIFY” around the bill and said the executive order he signed Monday that would “slash the cost of prescription drugs” and the “hundreds of billions of tariff money coming in” should be factored into the bill’s scoring.
With Republicans in control of both chambers of Congress, they are using a process called reconciliation that only requires a simple majority for passage to fast-track their legislation.
Republicans unveiled legislative text over the weekend that outlined their plans to slash Medicaid spending by imposing work requirements for recipients, make more frequent eligibility checks, and penalize states like New York and California that offer Medicaid to illegal immigrants.
The Congressional Budget Office wrote in a letter to Energy and Commerce Chairman Brett Guthrie that the proposal met its lofty target for $880 billion of savings over the next decade.
The Energy and Commerce committee resisted pressure from hardliners like Roy who demanded GOP leaders propose lowering the percentage the federal government pays to states’ Medicaid programs or include per-capita caps on federal Medicaid payments to states.
The health portions would save about $715 billion, according to CBO. However, at least 8.6 million more Americans will go uninsured.
Some culture war issues were addressed in the bill, including a provision to strip Medicaid funding from organizations that offer abortion services such as Planned Parenthood.
The legislation has already received pushback from Republicans in the Senate who will have to go along with it, including Missouri Sen. Josh Hawley, who wrote an opinion piece in the New York Times Monday warning against moves to cut Medicaid.
“This wing of the party wants Republicans to build our big, beautiful bill around slashing health insurance for the working poor. But that argument is both morally wrong and politically suicidal,” Sen. Hawley wrote.
Meanwhile, the Ways and Means Committee, which is marking up the tax portion of the bill, outlined a permanent extension of Trump’s 2017 Tax Cuts and Job Act, as well as making good on his campaign promises like no tax on tips and no tax on overtime.
The plan would temporarily increase the child tax credit, create a MAGA savings account for children and temporarily increase the standard tax deduction. It also calls for a $4 trillion increase to the debt ceiling, which Congress must address by mid-July to avoid default.
Some moderate Republicans have been adamant about not cutting into Medicaid, a benefit many of their constituents rely on.
The legislation also includes one of the most controversial components — a tax proposal that would hike the cap on state and local tax deductions (SALT) from $10,000 to $30,000 for those earning less than $400,000, which some moderate Republicans from states with higher taxes say is not enough.
New York Rep. Nick LaLota said he is “still a hell no” in a post on X.
Rep. Mike Lawler of New York told Bloomberg TV the proposal was “woefully inadequate,” adding that he will vote against the bill if it comes to the floor.
“We will continue to work in good faith with leadership, with the administration to get this done, but we need to have an honest and serious discussion about the issue,” he added.
Here’s what’s in the bill:
Medicaid cuts
Medicaid work requirements: The bill would impose work requirements on able-bodied Medicaid recipients — at least 80 hours per month — or require enrolling in an educational program for at least 80 hours or some combination per month.
More frequent eligibility checks: The legislation would require states to conduct more frequent eligibility determinations — from every 12 months to every six months.
Prohibits Medicaid funds for gender transition for minors: The measure would ban federal Medicaid funds from going to gender-affirming care for transgender minors.
Blocks Medicaid funding for non-citizens: Federal funding would be blocked from going to states that provide health care coverage under Medicare for migrants in the country without authorization.
Targets Medicaid funding for organizations that provide abortions: The measure includes language that would essentially prohibit health care providers who offer abortion services from receiving Medicaid funds.
Drug pricing: The bill makes a change to the Inflation Reduction Act and allows drugs to be exempt from Medicare’s drug price negotiation if they are approved to treat multiple diseases.
Cuts energy programs in Inflation Reduction Act: The proposal would cut Inflation Reduction Act programs like spending on electric vehicles, claw back climate-related federal funding and phase out clean energy credits.
Tax provisions
No tax on tips: A huge tax break for the service industry and a provision that was also trumpeted by Kamala Harris as the Democratic nominee for president, though she tied the tax break to an increase for the federal minimum wage. This is temporary and would expire at the end of 2028.
No tax on overtime: Would relieve millions of Americans who work overtime. This is temporary and would also expire at the end of 2028.
Extension of 2017 Tax Cuts and Job Act: Makes tax from the 2017 Tax Cuts and Jobs Act permanent; does not include a tax increase on the wealthiest earners. Trump posted last week that the proposal shouldn’t raise taxes on high-earners, “but I’m OK if they do!!!”
Creation of MAGA savings account for children: The contribution limit for any taxable year is $5,000. It includes a pilot program to start the accounts with $1,000.
SALT: Lifts state and local tax deduction cap to $30,000 with an income phase-down above $400,000. Married couples filing taxes separately are subject to a $15,000 cap and phase-down above $200,000 income.
Debt limit increase: The measure calls for increasing the debt limit by $4 trillion. Treasury Secretary Scott Bessent said last week lawmakers must address the debt limit by mid-July to avoid a default.
Enhanced tax deduction for seniors: Seniors would get a $4,000 higher standard tax deduction subject to income limits. This is temporary and would also expire at the end of 2028.
Hikes excise tax on colleges: Those with endowments over $2 million per student would increase from 1.4% to 21%, targeting Ivy League schools. Religious schools would be exempt.
Child tax credit: A temporary increase from $1,000 to $2,500 through 2028 and to $2,000 after that. Recipients will be required to have a Social Security number.
Deduction for qualified business: The bill would increase the deduction for qualified business income from 20% to 22%.
Extends increased estate and gift tax exemption: Would increase the estate and gift tax exemption to $15 million.
Elevates standard tax deduction: The measure includes some new tax cuts like temporarily elevating the standard deduction by $2,000 to $32,000 for 2025 for joint filers and by $1,000 to $16,000 through 2028.
“I don’t concede on something that I believe to be unconstitutional. I can’t. I took an oath to uphold the Constitution. So, we’re going to find a path through this. We’re working on that,” Johnson said Wednesday. “I talked to everybody who voted against the rule, and we’ll work it out. So, we got time to do it, and those conversations continue.”
Earlier this week, nine Republicans sided with Democrats to torpedo a procedural rule that included language to kill Republican Rep. Anna Paulina Luna’s bipartisan discharge petition on proxy voting for new lawmaker parents.
The vote has thrown the House into disarray and paralyzed the chamber, leaving Johnson to find a way to break the impasse. The vote also called into question Johnson’s ability to control Republicans’ razor-thin majority.
House Republican leaders, including Johnson, had said they would take the unprecedented step to block Luna’s petition on proxy voting, which gives both mothers and fathers the ability to vote remotely up to 12 weeks after the birth of a child.
After the vote, Johnson said because it failed, “we can’t have any further action on the floor this week.” The rule that lawmakers voted on included language to block proxy voting — as well as other pieces of legislation.
“The reason that I said that the agenda was taken out for the week is because it was, it was all in one rule. We could have run the SAVE Act, but the rest of it would have to have been done in a different rule. And I had a big group of House Republicans who did not want to support a rule until we took care of the proxy voting situation,” he claimed.
Johnson said he is “actively working” to accommodate young mothers serving in Congress.
“While I understand the pure motivations of the few Republican proxy vote advocates, I simply cannot support the change they seek,” Johnson wrote in a post on X on Wednesday. “The procedural vote yesterday was our effort to advance President Trump’s important legislative agenda while disabling a discharge petition that would force proxy voting and open a dangerous Pandora’s box for the institution.”
“To allow proxy voting for one category of Members would open the door for many others, and ultimately result in remote voting that would harm the operation of our deliberative body and diminish the critical role of the legislative branch,” he added.
Johnson said that he wants a room for mothers to nurse right off the House floor even though there is currently one in the basement of the Capitol. He said leaders are also looking at allowing the use of government money for members to fly their infant babies to D.C. with their mothers and fathers.
“We want to accommodate mothers who want to serve in Congress, and we’re the pro-family party, so we’ll do that, but we can’t do something that violates the Constitution or destroys the institution you serve,” he said.
(WASHINGTON) — Before a judge halted the takeover in February, President Donald Trump’s administration was planning to fire the overwhelming majority of employees at the Consumer Financial Protection Bureau and then fulfill the agency’s legal obligations with a skeleton crew, a top CFPB official testified on Monday.
During a lengthy court hearing on Monday, CFPB’s Chief Operating Officer Adam Martinez gave a full sworn account of the chaos and confusion that has consumed the federal agency that was set up to protect the public from unfair corporate practices ever since the Department of Government Efficiency and Trump administration officials moved to dismantle it.
His testimony provided a window into what is happening internally as DOGE spearheads Trump’s mandate to slash the federal government.
“Absent the temporary restraining order, the majority of the CFPB employees would have been terminated?” a lawyer representing the plaintiffs asked Martinez.
“The majority, yes,” Martinez said, adding the remaining employees would have been fired in later phases of the takeover.
Throughout his six-hour testimony, Martinez described the back-and-forth that played out in recent weeks among acting CFPB Director Russ Vought, DOGE, the Office of Personnel Management and the Office of Management and Budget. Officials toggled between halting and partially reinstating the agency’s work as they hastily slashed it and then scrambled to put pieces back in place to comply with law – in some cases losing key data and services along the way.
“I was having a hard time processing what was happening,” Martinez said, describing the early days of DOGE’s takeover of CFPB.
“So is it fair to say that there’s thought going into it, but only after? It’s like, shoot first and ask questions later?” Judge Amy Berman Jackson asked, after Martinez described how the agency was forced to cancel numerous critical contracts but rescinded some of those terminations soon after. Martinez agreed.
The hearing also shed light on the unique relationship between DOGE representatives and career civil servants, with Martinez frequently calling DOGE representatives the newly installed leaders of the CFPB.
“I don’t understand, why are you using them with leadership to refer to DOGE unless you had been told that DOGE was now your leadership,” asked Judge Jackson.
“They were designated as senior advisers, ma’am,” Martinez said.
“Senior leaders of the CFPB,” Judge Jackson asked.
“Correct,” Martinez said.
Martinez recalled everything from DOGE representatives’ first arrival at CFPB’s office in the first week of February — and the acting director’s email ordering CFPB employees to stop working — to the immediate chaos that ensued, as well as efforts by him and other career officials at CFPB to figure out what has been terminated and how to reinstate critical functions of the agency.
“There were a couple of high-priority issues that would have been devastating had it stopped,” Martinez said at one point.
“I was very, very concerned about the Consumer Response Center going down,” Martinez said, explaining potential backlash that could occur if those systems halted. He said he eventually coordinated a discussion between the head of that unit and DOGE’s representatives to “help them understand why his program was so important.”
On March 2, after much confusion and frustration as to what type of work CFPB was authorized to perform, OMB’s General Counsel Mark Paoletta, who has been representing Vought, eventually sent a letter directing CFPB employees to perform statutorily required duties.
But even after some units were told to return to work, they continued experiencing challenges — including loss of personnel and access to files of those who have left, according to accounts showcased during the hearing.
Jackson acknowledged the extraordinary situation workers at CFPB are facing, and she asked a series of questions to the witness.
“Would you say that sending out an order that says ‘Do no work’ is typical?” Judge Jackson asked.
“No,” Martinez responded.
“Would you say that canceling all the contracts before the analysis as to whether these are duplicative, worthwhile, not worthwhile, is typical?” the judge also asked.
“No,” Martinez again responded.
“Would you say that firing all probationary employees and two-year employees from the get-go is typical?” the judge asked.
“No,” Martinez responded.
“Would you say that trying to implement a brief without notice before the new director is even put in place, is typical?” the judge continued.
“No,” Martinez again replied.
“And would you say putting the rest of the employees on administrative leave with an order to do no work is typical?” the judge asked.
“No,” Martinez responded.
Jackson is considering issuing a preliminary injunction to effectively halt the breakdown of the CFPB, which she temporarily stopped last week. During Monday’s hearing, Martinez was grilled about emails that he had produced wherein he discussed carrying out the mass terminations despite the court’s order.
“You said that, in some ways, the delay was a blessing, because it gave you more time to figure out how to accomplish this wide-scale termination, right?” a lawyer asked.
“Yes,” Martinez said.
“And so you conveyed things like, there really isn’t going to be a CFPB now, right?” the lawyer continued.
“When you’re ripping out a number of people and functions, yes,” Martinez said.
