U.S. trade court questions tariffs
A federal trade court this week pressed the administration on whether its replacement global tariffs were lawfully implemented, signalling judges may not accept emergency powers used earlier. That legal pushback makes tariff policy more volatile for procurement and supply‑chain planning because duties could be litigated and reversed quickly rather than standing as durable costs. (politico.com)
On Friday, April 10, three judges on the United States Court of International Trade spent nearly three hours questioning whether the White House had a legal basis for a new 10 percent tariff on imports from around the world. The tariff went into effect on February 24 after the Supreme Court knocked out the administration’s earlier, broader tariff plan on February 20. (politico.com) (pbs.org) This fight is not about whether tariffs exist. It is about which law a president can use when Congress did not pass a new tariff bill. (pbs.org) (cit.uscourts.gov) The administration’s first route was the International Emergency Economic Powers Act, a 1977 law usually used for sanctions and emergency economic restrictions. The Supreme Court said on February 20 that this law did not let the president impose broad tariffs just by calling trade deficits an emergency. (pbs.org) (politico.com) So the White House switched to Section 122 of the Trade Act of 1974, a backup law that allows a global tariff of up to 15 percent for 150 days. Trump chose 10 percent in February and said he could raise it to 15 percent, but as of the April 10 hearing he had not done that. (pbs.org) (politico.com) That 1974 law was written for a “large and serious” balance-of-payments deficit, which is a financing problem between countries, not just a trade gap on goods. In court, the judges kept circling one basic question: does today’s U.S. trade deficit count as that kind of payments problem. (politico.com) (axios.com) The age of the law is part of the problem. Section 122 came out of the 1960s and 1970s, when the dollar was still tied to gold and the United States was dealing with strains in the old Bretton Woods monetary system. (pbs.org) (politico.com) Judge Timothy Stanceu put the gap bluntly in the hearing: the court was trying to figure out how to translate a 1974 statute into a 2026 economy. Lawyers for the states and small businesses argued that Congress wrote Section 122 for currency stress, not for the modern U.S. habit of importing more than it exports. (politico.com) The challengers are not a single company acting alone. Reuters and Politico reported that 24 mostly Democratic-led states, along with small businesses, sued to block the February tariffs in the trade court in New York. (usnews.com) (politico.com) One awkward detail is that the government itself argued in a filing last year that Section 122 did not have an obvious fit for trade deficits. The trade court also suggested in an earlier ruling that Section 122 might be available, which helps explain why Friday’s hearing sounded less like a clean yes-or-no case and more like judges wrestling with a half-forgotten tool. (pbs.org) (politico.com) The tariff is temporary even if the White House wins this round. Section 122 lasts 150 days, which puts the current measure on track to expire on July 24 unless Congress extends it or the administration finds another legal path. (pbs.org) (politico.com) That is why importers, retailers, and manufacturers are watching a courtroom argument about a 52-year-old statute. A tariff that can be erased by judges or expire in July is not the same thing as a tariff that companies can treat as a permanent cost when they sign supply contracts, price inventory, or decide where to source parts. (politico.com) (cit.uscourts.gov)
