In the case of McGoldrick v. Gulf Oil Corp., 1939, the U.S. Supreme Court ruled in favor of New York City's Comptroller, Joseph D. McGoldrick, allowing a city tax on sales made by out-of-state companies to be applied to oil sold and delivered within city limits by Gulf Oil Corporation. The court held that such taxation did not violate the Commerce Clause of the Constitution as it was not an undue burden on interstate commerce but rather a legitimate exercise of state power for goods ending their transit within its jurisdiction. This decision upheld New York’s right to impose taxes on transactions completed within its borders even if they involved interstate commerce or were initiated outside state lines.

In the dissenting opinion for McGoldrick v. Gulf Oil Corp., Justice McReynolds argued that the tax imposed by New York City on petroleum products imported from foreign countries and sold in original packages was unconstitutional as it violated both the Import-Export Clause and Commerce Clause of the U.S Constitution. He contended that such a tax interfered with federal authority over foreign commerce, which is exclusively vested in Congress by Article I, Section 8 of the Constitution. The justice also pointed out that this case had similarities to previous cases where state taxation on imports was deemed unconstitutional, thus he saw no reason why this case should be treated differently. In his view, allowing states or cities to impose taxes on imports would lead to chaotic conditions due to varying local regulations and could potentially harm international trade relations.