How a small wine importer took On Trump’s tariffs

Victor Owen Schwartz was preparing linguine and clams for dinner Wednesday night when he spotted an email from his lawyers with some good news. “I wasn’t shocked," said Schwartz. “I thought we were right, but I know that’s not always the way the world works."

Schwartz, a small wine importer and distributor, is the lead plaintiff in a lawsuit that was filed in April by the Liberty Justice Center, a libertarian legal group, to challenge President Trump’s tariffs. The email told him that a federal court had ruled in his favor and invalidated almost all of Trump’s tariffs.

“This is really a win for small business in America and the right of free trade," Schwartz said.

The 66-year-old businessman is the unlikely face of tariff resistance. He is one of five small businesses that agreed to take on the U.S. government. Big corporations, powerful CEOs and trade groups didn’t mount legal challenges to the Trump administration’s tariffs.

An appeals court Thursday granted a government request to pause the decision while it considers an appeal. Other tariff challenges, including one by a group of states, have been filed, but Schwartz’s case is front and center.

An unhappy banker, Schwartz started his business, VOS Selections, 39 years ago after working for five years as a commercial lender. His New York City company imports wines, sakes and spirits from small producers in 16 countries. European wines account for the bulk of sales.

He was introduced to Ilya Somin, a George Mason University constitutional law professor and co-counsel in the case, by a family member who had been a student of Somin’s. The professor had written a February post on the blog Volokh Conspiracy calling the tariffs unconstitutional. Lawyers at the Liberty Justice Center had reached out to him to help bring a case.

“We are importers. We are canaries in the coal mine, on the front line of this issue," said Schwartz, who started as a two-person operation and now has about 20 employees. His firm sells to restaurants, small liquor stores and big chains such as Total Wine.

Schwartz said he was nervous about the political repercussions of challenging the Trump administration but decided to go ahead anyway. “If I didn’t do it, who is going to do it?" he said. “It was not a political decision. It was a business decision."

Schwartz started his wine business 39 years ago after working for five years as a commercial lender.

The Liberty Justice Center, which is based in Texas, has brought more than 135 lawsuits since it launched in 2011. The libertarian, nonprofit public-interest litigation law firm previously was best known for a case that reached the Supreme Court in 2018 that allowed government employees to opt out of union dues.

The group initially spoke with about a dozen small-business owners about joining the tariffs lawsuit but had little success finding potential plaintiffs. “A lot of people we contacted were hesitant to challenge the administration," said Jeffrey Schwab, senior counsel at the Liberty Justice Center and lead counsel on the tariff lawsuit.

In early April, Somin wrote in a post that he and the Liberty Justice Center were looking for plaintiffs for a lawsuit challenging the tariffs that they would represent on a pro bono basis.

“I think the ideal client would be a privately held company affected by the tariffs that imports materials directly from one of the countries subject to the tariffs," Somin wrote. “The company doesn’t have to be a small business, but since I suspect many small businesses will be disproportionately harmed by the tariffs, that may be an ideal plaintiff."

The post generated a lot of interest. The group spoke with about three dozen businesses before settling on at least 10 they liked. Some decided not to participate.

Somin said being counsel on a case was new for him, as he mostly spends his time writing amicus briefs and doesn’t litigate cases. However, the libertarian scholar did represent himself about 30 years ago at a hearing in front of a Massachusetts state board to fight points being added to his auto insurance. “I was successful in that case," he said.

Along with VOS, four other small businesses joined the case: a fishing tackle retailer in Pennsylvania, a women’s cycling apparel brand based in Vermont, a Utah manufacturer of plastic pipe, and MicroKits, a Virginia-based maker of educational electronic kits.

The five plaintiffs, collectively, import goods from more than three dozen countries, Schwab said, and represented a variety of industries. VOS was selected as the lead plaintiff in part because “wine illustrated why the broad-based tariffs don’t make any sense," Schwab said.

David Levi, the owner of MicroKits, which sells do-it-yourself electronics kits for students and hobbyists, gets about 60% of his parts from China. “Either you can’t find them in the U.S., or they are five to 10 times more expensive," he said.

Levi started the business in 2020 and has one part-time employee. When the tariffs hit, he stopped placing parts orders. “I was petrified," he said. “The meaning of petrified is you are so scared, you don’t take any action."

With fewer parts on hand, he had to slow production and cut his part-time employee to 15 hours a week from 25. He also raised prices. A kit that produces sounds now sells for $49.95, up from $39.95 before the tariffs.

VOS also had to review each of its products to quantify the tariff impacts. Schwartz and his daughter Chloë Syrah Schwartz, who helps run the business, decided to put off purchases of some new items and slower-selling products.

Tariffs are particularly painful, Schwartz said, because they must be paid when the goods arrive in the U.S., not when they are sold. The company has paid about $20,000 in new tariff costs this year.

“The simple word is contraction," said Schwartz. “We have to buy less. We have to buy more carefully. We can’t take the same risks we normally would."

Write to Ruth Simon at Ruth.Simon@wsj.com and James Fanelli at james.fanelli@wsj.com