In the case of Dooley v. Pease in 1900, the United States Supreme Court ruled on a dispute involving tariffs and import duties. The plaintiff, Dooley, was an importer who had paid duties under protest on goods imported from Puerto Rico after Spain ceded it to the U.S following the Spanish-American War but before Congress enacted legislation establishing a civil government for Puerto Rico and imposing customs duties on its products. He sued to recover these payments arguing that they were unconstitutional as per Article I Section 8 Clause 1 of Constitution which gives Congress power to lay taxes only within U.S territory or its possessions. The court held that at time when duty was levied, Puerto Rico wasn't considered foreign country nor did it fall under domestic revenue laws of U.S., hence no duty could be imposed upon imports from there into New York (where Dooley operated). Therefore, he was entitled to refund of those payments with interest. This decision established precedent regarding how territories acquired by US are treated in terms of taxation until formal incorporation through Congressional action.

In the dissenting opinion for Dooley v. Pease, Justice Harlan argued that the majority's decision was inconsistent with constitutional principles and previous court rulings. He contended that Puerto Rico should be considered a part of the United States for tariff purposes following its cession from Spain, as per Article I, Section 8 of the Constitution which grants Congress power to regulate commerce with foreign nations and among states. He disagreed with the majority's view that territories acquired by U.S are not domestic but foreign until Congress incorporates them into U.S., stating it contradicts earlier decisions where taxes were levied on goods transported between different parts of U.S territory regardless if they had been formally incorporated or not. Furthermore, he expressed concern over potential misuse of this ruling to justify discriminatory tariffs against newly acquired territories in future.