Court questions global tariffs
Judges on the U.S. trade court appeared to question the legal basis for the administration's 10% global import tax, suggesting a large trade deficit alone may not justify such broad tariffs. States and small businesses have pursued challenges and coverage shows skepticism on the bench about the authority to impose the tariff, keeping policy volatility on boards' radars. (reuters.com) (nytimes.com)
A panel of judges spent Friday asking a basic question the White House did not want to hear: does a big U.S. trade deficit actually let a president slap a 10 percent tax on imports from nearly everywhere? The hearing was in the U.S. Court of International Trade in New York, and the judges sounded doubtful that the statute fits that move. (reuters.com) The tariff at the center of the case took effect on February 24, 2026, and it is a flat 10 percent surcharge on many imports. Twenty-four mostly Democratic-led states and two small businesses sued to stop it. (reuters.com) This is the administration’s second legal theory, not its first. On February 20, 2026, the Supreme Court ruled 6-3 that the International Emergency Economic Powers Act does not let the president impose tariffs, knocking out the broader tariff program the White House had been using. (congress.gov) (politico.com) Within days, the White House switched to Section 122 of the Trade Act of 1974. That law lets a president impose a temporary import surcharge of up to 15 percent for no more than 150 days unless Congress extends it. (federalregister.gov) (uscode.house.gov) But Section 122 was written for a very specific problem: a “large and serious United States balance-of-payments deficit” or an imminent drop in the dollar in foreign exchange markets. That is narrower than saying America buys more goods than it sells. (uscode.house.gov) (congress.gov) That distinction drove the hearing. Reuters reported that judges questioned whether a trade deficit in goods is the same thing as the kind of international payments problem Congress had in mind, and The New York Times said the bench pressed government lawyers on whether the law really covered a broad tariff on imports from around the world. (reuters.com) (nytimes.com) The administration’s argument is that the United States runs a large trade gap and that imports are part of a wider international payments problem. The challengers’ argument is that Section 122 is an emergency tool from 1974, never used by any prior president, and not a blank check for a near-global tariff. (whitehouse.gov) (cbsnews.com) The court did not rule from the bench on Friday. But this court has moved quickly on Trump tariff cases before, and Associated Press noted that in an earlier tariff fight last year it issued a decision about two weeks after oral argument. (apnews.com) For companies, this is why tariff planning still feels like building on wet concrete. The current tariff is lower than the earlier one the Supreme Court killed, but it sits on a legal foundation that judges now appear to be testing line by line. (reuters.com) (nytimes.com) If the judges strike this version down too, the White House loses another fast route to unilateral tariffs. If they uphold it, presidents get a revived 1974 power that Congress wrote with a 15 percent cap and a 150-day clock. (uscode.house.gov) (federalregister.gov)
