Court questions 10% tariffs

A federal trade court is questioning whether the administration’s 10% global tariffs fit a 1974 law written for international payments crises, not ordinary trade gaps. (opb.org) The three-judge panel at the U.S. Court of International Trade heard arguments on Friday, April 10, in New York over tariffs President Donald Trump imposed on February 20 after the Supreme Court struck down his broader tariff plan. (politico.com) Trump used Section 122 of the Trade Act of 1974, which allows a temporary import surcharge of up to 15% for 150 days; his current rate is 10%, and the duties are scheduled to expire on July 24 unless Congress extends them. (uscode.house.gov, opb.org) That law is narrow on its face. It refers to “fundamental international payments problems,” including “large and serious” balance-of-payments deficits or a threatened drop in the dollar, not a general policy preference for higher tariffs. (uscode.house.gov) Lawyers for Oregon and a coalition of 24 mostly Democratic-led states told the court the administration is mixing up a trade deficit with a balance-of-payments deficit, and argued Section 122 has never before been used for sweeping worldwide tariffs. (politico.com, illinoisattorneygeneral.gov) The White House says the statute does apply. In a February 20 proclamation, Trump said senior officials concluded the United States faced “fundamental international payments problems” and that an import surcharge was required to address them. (whitehouse.gov) Judges pressed both sides on what Congress meant by “balance-of-payments deficits” in 1974 and whether that term can be carried cleanly into the modern economy. Judge Timothy Stanceu said from the bench, “We’re not quite sure how to translate 1974 into 2026.” (politico.com) The case landed quickly because the administration turned to Section 122 right after losing at the Supreme Court in February on tariffs imposed under the International Emergency Economic Powers Act of 1977. That earlier ruling cut off Trump’s preferred emergency route and forced the White House onto a shorter legal clock. (opb.org) States challenging the tariffs say the costs are already measurable. Illinois Attorney General Kwame Raoul said economic analysis filed with the court estimated at least $748 million a year in added costs for the 24 plaintiff states. (illinoisattorneygeneral.gov) The court did not signal when it will rule, and some trade lawyers expect judges to weigh the tariffs’ short lifespan when deciding whether to intervene. That leaves importers planning summer orders around a tariff that could expire on July 24, be extended by Congress, or be struck down first. (politico.com, opb.org)