US tariff rule faces court test

A U.S. trade court is testing whether President Donald Trump could legally slap a 10% tariff on most imports after the Supreme Court blocked his earlier tariff plan. (reuters.com) (supremecourt.gov) A three-judge panel of the U.S. Court of International Trade heard arguments in Manhattan on Friday, April 10, in a case brought by 24 mostly Democratic-led states and two small businesses. The businesses are Basic Fun, a toy company, and Burlap and Barrel, a spice seller. (abcnews.com) (reuters.com) The tariff took effect on February 24 under Section 122 of the Trade Act of 1974, a law that lets a president impose a temporary import surcharge of up to 15% for no more than 150 days. U.S. Customs and Border Protection said the new duty is 10% ad valorem on imports from every country, with listed exemptions. (whitehouse.gov) (content.govdelivery.com) (uscode.house.gov) The legal fight follows a February 20 Supreme Court ruling in *Learning Resources v. Trump* that said the International Emergency Economic Powers Act does not authorize tariffs. Chief Justice John Roberts wrote the 6-3 decision that struck down Trump’s earlier emergency-based tariff program. (supremecourt.gov) (reuters.com) States and businesses told the trade court the administration is trying to do indirectly what the Supreme Court barred directly. Their lawyers argued Section 122 was written for balance-of-payments problems tied to the dollar and international accounts, not for a broad response to the modern U.S. trade deficit. (politico.com) (bloomberg.com) (uscode.house.gov) Justice Department lawyers defended the tariff as a different measure under a different statute. They argued Section 122 gives the president room to act when he finds “fundamental international payments problems,” and the White House proclamation says those problems exist. (whitehouse.gov) (federalregister.gov) Judges pressed both sides on whether a large trade deficit is the same thing as the kind of balance-of-payments crisis Congress had in mind in 1974. Some questions also focused on whether the states have standing to sue, even as the court appeared more open to the businesses’ claims. (reuters.com) (abcnews.com) Section 122 has another limit: it expires after 150 days unless Congress extends it. That means the court is weighing a tariff with a built-in clock even before any ruling on the merits or appeal. (uscode.house.gov) (whitehouse.gov) For importers, the case has turned tariff policy into a legal-risk problem as much as a tax-cost problem. Companies now have to decide whether to raise prices, shift suppliers, or wait for a court ruling that could erase the duty or leave it in place for months. (nbcnews.com) (bdo.com) The next step is a ruling from the trade court, with appeals likely no matter who wins. Until then, the 10% charge remains in force, and the legal question hanging over it is now part of how U.S. businesses buy goods from abroad. (politico.com) (content.govdelivery.com)