Court tests Trump's tariffs
U.S. judges heard fresh challenges this week over the administration’s 10% global tariff, turning what was political risk into a live legal question. Plaintiffs — a mix of small businesses and states — argued the law the White House relies on is outdated, while judges probed whether a trade deficit alone justifies the duty, creating uncertainty for import‑sensitive companies and supply chains. (reuters.com)
Three judges in New York spent Friday asking a question that could decide whether a 10% tax stays on imports from almost every country: does a normal U.S. trade deficit count as the kind of emergency Congress had in mind 52 years ago? The case is in the U.S. Court of International Trade, the specialty court that handles customs and trade fights. (axios.com) (cit.uscourts.gov) The tariff under attack is not last year’s bigger Trump tariff package. It is the replacement tariff Trump put in place on February 24, 2026, after the Supreme Court on February 20 blocked many of his earlier emergency tariffs. (reuters.com) (politico.com) Trump’s first route used the International Emergency Economic Powers Act, a 1977 law built for national emergencies. After that route was cut off, the White House switched to Section 122 of the Trade Act of 1974, a law that lets a president add a temporary import surcharge of up to 15% for up to 150 days. (congress.gov) (politico.com) Section 122 was written for a “large and serious” balance-of-payments deficit. That phrase is the whole fight now, because a balance-of-payments problem is a country struggling to pay the rest of the world, while a trade deficit is simply buying more goods than it sells. (axios.com) (politico.com) The plaintiffs are 24 mostly Democratic-led states plus two small businesses. They told the court that the law is being stretched past recognition, because the United States has run goods trade deficits for decades without the kind of currency or financing crisis Section 122 was designed to address. (reuters.com) (bloomberg.com) The White House’s own April 2, 2025 order tied the tariff to “large and persistent annual United States goods trade deficits.” That order called those deficits an “unusual and extraordinary threat” to national security and the economy, and said foreign tariff barriers and wage-suppressing policies were part of the cause. (whitehouse.gov) (federalregister.gov) That is why judges kept circling the same point on April 10: if Congress wrote “balance of payments” and the administration says “trade deficit,” are those actually the same thing? Axios reported the panel said nobody had offered a satisfying definition in court. (axios.com) (abcnews.go.com) There is also a clock running in the background. Section 122 lets the president keep the surcharge for 150 days, and anything longer needs Congress, so even a slow court process could collide with the tariff’s built-in expiration window. (politico.com) (apnews.com) For importers, that makes the tariff feel less like settled policy and more like a meter still running during a lawsuit. Companies have to decide now whether to absorb the 10%, pass it to customers, or reroute supply chains before the court says whether the charge was lawful in the first place. (reuters.com) (apnews.com) The deeper issue is not just this 10% tariff. It is whether a president can use old, loosely worded trade laws as a backup generator after courts shut off a broader source of tariff power. (politico.com) (congress.gov) If the judges strike this version down too, the administration loses the fastest stopgap it had after the Supreme Court’s February 20 ruling. If the judges allow it, Section 122 goes from an obscure 1974 provision to a live template for short-term global tariffs. (reuters.com) (axios.com)
