Spice Company Wins Suit Over 10% Trump Global Tariffs

0:00 Section one twenty two was imposed about five

0:02 hours after the president lost his IEBA tariff case.

0:06 Section one twenty two says the president does

0:09 have the authority to grant up to 15% tariffs

0:12 on pretty much any country in the world if

0:16 there is a large and serious balance of payments deficit.

0:19 He has that authority for a hundred and fifty days,

0:22 and then congress has to step in and either renew those tariffs or they go away.

0:27 So our case held that he didn't have a balance of payments,

0:33 large and serious deficit,

0:35 and he was not authorized in this instance to use section one twenty two.

0:39 The court came back.

0:40 They agreed with us.

0:42 They granted motion for summary judgment

0:44 to our plaintiffs and the state of Washington,

0:46 and they also issued a permanent injunction.

0:49 What that means is the tariffs stop for our clients.

0:54 They still continue for everybody else.

0:57 But effectively, like what happened in the Aiba case,

1:01 if we'd won a universal injunction,

1:03 the government would have also applied to have immediate,

1:06 set aside of that injunction and immediate stay,

1:09 and the tariffs would have continued just like they did in Aifa.

1:13 So we're still kind of in the same world.

1:15 They just chose to do it a little bit differently.

1:18 The government did appeal on the following day after the opinion came out,

1:22 and so we're waiting to hear from the federal

1:24 circuit when our case will be heard.

1:27 Ethan and Ori, I wanna go to you.

1:29 Talk to us about what these tariffs have meant for your business,

1:32 and this decision meant that you don't have to pay.

1:35 But as we were just talking about,

1:37 that doesn't mean other small businesses aren't still tangled up in this web.

1:40 Ethan, why don't you kick us off?

1:41 And then and, Orey, we can go over to you.

1:43 Yes.

1:44 Thanks for having us.

1:45 Orey and I are the cofounders and co CEOs of Burlap and Barrel.

1:48 We're a single origin spice company,

1:50 a a direct importer of spices from all around the world.

1:54 We're a very small company.

1:56 We really grew up during COVID,

1:58 so navigating all of this has been quite challenging.

2:01 We were incredibly gratified and thrilled to see that we won the case.

2:05 I mean, huge kudos to Sarah and Jeffrey Schwab

2:08 and and the the Liberty Justice Center for a very well argued case.

2:13 You know, it's kind of it's kind of amazing to us that a very small company like

2:18 ours can sue the government over what turns out

2:21 to be an illegal policy and and actually win.

2:24 The the tariffs have had a a pretty

2:26 significant impact on our business over the past year,

2:28 a couple $100,000 paid out under the IEPA

2:31 tariffs plus additional tariffs under section one twenty two.

2:34 So it's it's been a challenging situation to navigate overall,

2:37 but but we're thrilled to be in this position.

2:41 Ori, do you think you're gonna get that money back?

2:45 Yeah.

2:45 This was a really big victory for us as as, small entrepreneurs,

2:50 as as social entrepreneurs too.

2:51 This was a really big win with invalidating these tariffs for us

2:55 and creating a kind of narrower exemption than we would have liked.

2:58 This is the beginning.

2:59 That's the crack in the dam that's

3:00 gonna take the tariffs overall down, we believe.

3:02 And this is also the beginning of us being able to get this money back,

3:06 but we're gonna keep pushing.

3:07 This never was a case just for burlap and barrel.

3:10 This was always about, invalidating this overreach tariffs,

3:12 in order to support not just us,

3:14 but the rest of the small businesses across America.

3:17 Ethan, walk us through your decision to file this suit to push back against

3:22 these these tariffs for you to get hooked up with the Liberty Justice Center.

3:25 I imagine there are many hundreds,

3:26 many thousands of small businesses who have been

3:28 under the same pressures that you've you've been under.

3:30 Why did you decide to take the step of of fighting this in court?

3:34 Yeah.

3:34 It's a great question.

3:35 We are a social enterprise, a public benefit corporation.

3:38 So so social impact positive social impact has always been at the heart

3:42 of what we do from working with small farms around the world to to now,

3:46 pursuing this lawsuit.

3:47 We've been following the AIPA case, over the past year quite closely.

3:51 We filed an amicus brief.

3:52 So we've been in touch with Liberty Justice, through that period.

3:57 But, ultimately, the decision to file this this suit was a a quick one.

4:01 We had a couple of days, essentially, to make a decision.

4:04 I was stranded in India because of a bombing in Iran.

4:07 You know, it was just sort of a difficult moment to make a big decision,

4:13 but but we were really excited to pursue it.

4:16 You know, it it wasn't a hard decision even though we had to make

4:19 it quickly because we knew that this, this is the right thing to do.

4:22 And and as you said, there are there are hundreds,

4:24 if not hundreds of thousands of of, importers across the country.

4:26 And where where are the big corporations?

4:29 You know, we're a tiny little company, just to emphasize.

4:31 You know, we're an ecommerce retailer.

4:33 We sell through our website.

4:34 We're not a a big spice importer even in our own world,

4:37 let alone, you know, compared to other big importers of other products.

4:40 Where where were all of the big corporations who had the budget,

4:44 had the resources to to push back against this policy?

4:46 The the only lawsuits that they filed were for their own refunds,

4:50 you know, purely self interested.

4:51 And as already mentioned, we're we're really doing this to support

4:55 small businesses in particular across the country.

4:57 We felt like somebody had to stand up, and and for various reasons,

5:03 we, we were excited to be the ones to do that.

5:06 I wanna ask you about your product because, I mean,

5:09 spices are the OG international trade going back millennia.

5:12 Right?

5:12 This is what started international commerce and trade

5:15 routes and kinda shaped the world we're in now.

5:17 Part of this this tariff is the president

5:19 trying to get people to manufacture products in America.

5:22 But as we know throughout history

5:25 and the history of conquest and colonialization

5:27 and all this, some things can only be grown in certain places.

5:31 So talk us through our your products,

5:33 where you get them, and how this all came to be,

5:36 and the complicated web of navigating all

5:38 that while trying to navigate these tariffs?

5:41 Yeah.

5:41 Great question.

5:41 When Ori and I went on Shark Tank a couple of years ago,

5:44 we joked that the spice trade is the the actual oldest, profession in the world.

5:49 No.

5:50 I mean, it it's not just,

5:52 the sort of biology or botany of where certain crops can grow,

5:56 but also the long standing traditions

5:58 of growing those particular crops in different places.

6:00 So, sure, you can't grow cinnamon in in The United States,

6:04 but, we work with some really

6:06 specialized cinnamon producers in in Central Vietnam.

6:08 They grow a unique species, a rare species.

6:11 We're the only company to import it.

6:13 We call it royal cinnamon.

6:14 It has a long history associated with the royal court in Central Vietnam.

6:18 We work with, foragers in Central

6:20 Afghanistan North Northeastern Afghanistan rather.

6:22 I was an aid worker there before starting the company,

6:25 and so we still work with communities that I worked with as an aid worker,

6:29 to harvest this this very special variety of wild cumin.

6:32 We were the first company to import it into The US.

6:34 The heritage depends on on having a customer base in The US,

6:38 and and that's what we do as a company on a daily basis,

6:41 and and that's really what the tariffs have have kind of attacked in particular

6:45 is is these specific supply chains from places that grow really unique products.

6:50 O'Rie, let me ask you just about the weight

6:52 these tariffs have had on on the business.

6:53 We've heard of a lot of companies having to wrestle

6:55 with whether or not to pass on additional fees to their customers.

6:58 Take us behind the scenes as you look at your financials.

7:01 As you have looked at your financials over the last many months,

7:05 what has this done to the business, the imposition of these tariffs?

7:08 What did they threaten to do to the business broadly?

7:11 So when we when the reciprocal tariffs first came out, back in last April,

7:14 we looked at our business and said, what can we do?

7:17 We can't bring Vietnamese cinnamon from everywhere else.

7:19 We can't bring in herbs to Provence, not from Provence,

7:22 which is what we do as a business philosophically.

7:24 That's where you get the best spices in the world from.

7:27 We looked around, and ironically,

7:28 what we had realized is that the place where we

7:30 can save the money that we're paying on tariffs was domestically.

7:33 So we started looking at how fast do we ship things.

7:35 We started saving money on cardboard and corrugate.

7:37 We started looking at slowing down hiring and all these things.

7:39 So the big irony of all this is that in order

7:42 for us to keep prices steady, not raise prices,

7:44 not not push prices back onto the farmers to kinda cover these tariffs,

7:47 what we ended up doing is all the savings came domestically.

7:50 And with the tariffs being refunded,

7:52 also thanks to the work from the Liberty Justice Center,

7:55 that money that's coming back to us, is in the low 6 figures,

7:58 is going right back into the American economy

8:00 and right back into investing in our own business.

8:02 And we want the exact same outcome from these section

8:04 one twenty two tariffs in the same way.

8:06 Sarah, what's next?

8:07 Do you have to wait for this to get kicked up to the appeals court?

8:10 Do you have any kind of timeline for this, and do

8:13 you have other businesses coming to you and wanting the same results?

8:17 Yes.

8:17 So, on Friday, the government did file

8:20 their notice of appeal to the Federal Circuit Court.

8:23 So we are waiting on that court to issue

8:26 a briefing schedule and set a hearing date.

8:29 I'm hoping that, like with the IEP case, they expedite this.

8:33 It's in their best interest.

8:34 I think the government would want that too so

8:36 they can get this settled once and for all.

8:39 And we really need to get relief for these businesses that have not

8:43 only been forced to pay the AIPA tariffs and wait for their refunds.

8:46 Now they're paying these illegal tariffs, and it just has to stop.

8:51 Sarah, what can you say about the government's capacity to defend

8:54 the tariffs that the president has has put in place here?

8:57 I think there has been some speculation from the get go that there

8:59 are perhaps specious arguments from the president

9:01 about the national security justifications,

9:03 for instance, on the previous tariffs on his use

9:05 of these in the in this novel way.

9:07 As you've gone through this process,

9:09 how formidable were were the opponents that you were up against?

9:14 You know, they had an argument that made sense for them.

9:18 I think we had a stronger argument.

9:20 The the court really focused on the statutory interpretation and what

9:23 was going on in 1974 when congress passed the trade act.

9:27 Well, we are in a much different world,

9:30 and the balance of payments deficit crisis can no

9:34 longer exist in a floating rate exchange rate world,

9:37 which is what we are in now.

9:39 So the government was arguing that a trade deficit is

9:41 in fact the same thing as a balance of payments deficit.

9:45 We argued that it wasn't.

9:46 The court agreed with us.