Tariff rules under legal fire

A federal trade court is weighing whether President Donald Trump can keep his 10% tariffs on most imports in place through July 24. (opb.org) A three-judge panel at the U.S. Court of International Trade heard more than three hours of arguments on Friday, April 10, in lawsuits brought by 24 mostly Democratic-led states and by small businesses. The tariffs took effect on February 24 under Section 122 of the Trade Act of 1974, a provision that allows tariffs up to 15% for 150 days unless Congress extends them. (opb.org) (businesstimes.com.sg) The judges pressed both sides on what Congress meant by “balance-of-payments deficits” when it wrote Section 122 in 1974 and whether today’s trade deficit fits that term. Jeffrey Schwab of the Liberty Justice Center, which represents some plaintiffs, said the judges asked “tough questions of all sides.” (opb.org) The case follows a Supreme Court ruling on February 20, 2026, that said the International Emergency Economic Powers Act of 1977 did not let Trump use emergency powers to impose his earlier global tariffs. Four days later, Trump switched to Section 122 and set a 10% rate, saying he could later raise it to 15%. (opb.org 1) (opb.org 2) Section 122 is a rarely discussed trade tool built for short-term action when the United States faces international payments problems, not a standing power to tax imports indefinitely. The states suing say Trump is using it as a substitute for the broader tariff program the Supreme Court already rejected. (opb.org) The administration argues the tariffs are needed to address longstanding U.S. trade deficits. Critics point to a Justice Department filing from last year that said Section 122 did “not have any obvious application” to trade deficits, which it called different from balance-of-payments problems. (opb.org) While that court fight moves ahead, U.S. Customs and Border Protection is building the refund system for tariffs already collected under the old emergency-powers regime. On April 10, the agency confirmed that Phase 1 of its refund process will open on April 20 through the Automated Commercial Environment, the government’s trade portal. (thompsonhinesmartrade.com) Customs calls the tool Consolidated Administration and Processing of Entries, or CAPE. Importers of record or their brokers will file a CAPE declaration, Customs will remove the International Emergency Economic Powers Act tariff codes, recalculate duties, and issue consolidated refunds with interest by liquidation date. (thompsonhinesmartrade.com) Phase 1 covers certain unliquidated entries and certain entries within 80 days of liquidation, with more complicated cases pushed to later phases. Customs said refunds will generally be issued within 60 to 90 days after a CAPE declaration is accepted, unless compliance concerns require extra review. (thompsonhinesmartrade.com) So importers now face two tracks at once: a live court test of Trump’s current 10% tariffs, and a formal path starting April 20 to recover some of the duties paid under the tariffs the Supreme Court already struck down. (opb.org) (thompsonhinesmartrade.com)