US court questions 10% global tariff

Three judges in New York spent hours asking why a law written for a payments crisis should let a president slap a 10% tax on imports from nearly every country on earth. By the end of Friday’s hearing, the panel sounded unconvinced that a trade gap by itself was enough. (abcnews.com) (reuters.com) The tariff at the center of the case took effect on February 24, 2026, and adds 10% to many imported goods at the border. Customs and Border Protection told importers the surcharge applies for 150 days unless Congress extends it. (cbp.gov) (federalregister.gov) This was President Donald Trump’s backup plan after the Supreme Court shut down his first tariff theory on February 20, 2026. In a 6-3 ruling, the court said the International Emergency Economic Powers Act does not give a president power to impose tariffs. (supremecourt.gov) (congress.gov) So the administration switched to Section 122 of the Trade Act of 1974, a half-century-old provision that had never been used before February 2026. That law lets a president impose a temporary import surcharge of up to 15% for 150 days to deal with what it calls “fundamental international payments problems.” (whitehouse.gov) (federalregister.gov) The legal fight is over what those words mean. Government lawyers argued that the United States’ large trade deficit fits the statute, while the states and small businesses suing said Congress wrote Section 122 for a narrower balance-of-payments problem tied to the dollar and international accounts, not as a general weapon against imports. (abcnews.com) (nbcnews.com) That distinction sounds technical, but it is the whole case. A trade deficit is the country buying more goods than it sells, while a balance-of-payments problem is a broader strain in the nation’s international financial accounts, and the judges pressed whether Congress meant the second thing, not the first. (reuters.com) (law.cornell.edu) The challengers are 24 mostly Democratic-led states and two small businesses, and they say the White House is trying to do with a narrower law what the Supreme Court already blocked under a broader one. One estimate cited in the case says the tariff could cost the average household about $1,000. (reuters.com) (abcnews.com) The administration says Section 122 was built for exactly this kind of moment and points to the statute’s plain numbers: up to 15%, for up to 150 days, without waiting for Congress first. Trump has also said he wants to raise the levy from 10% to the law’s 15% ceiling. (federalregister.gov) (usnews.com) No ruling came from the bench on April 10, and the three-judge Court of International Trade panel could take days or weeks to decide. Until then, companies importing toys, machinery, food, and parts are stuck planning around a tariff that is active now, capped by statute in late July, and still one court order away from disappearing early. (abcnews.com) (cbp.gov)