Tariff legality in court
U.S. judges are now weighing whether President Trump’s 10% global tariff can legally stand, turning tariff risk into legal—and not just policy—uncertainty. Judges questioned whether a large trade deficit is a valid statutory basis and dozens of states and small businesses urged courts to scrap the measure, while some outlets noted the panel showed skepticism of aspects of both sides’ arguments ( ).
A tax that hit nearly every import entering the United States is now hanging on a question from the 1970s: can a president call today’s trade gap a “balance-of-payments” problem and impose a 10% tariff without Congress? On April 10, a three-judge panel at the United States Court of International Trade spent hours pressing both sides on exactly that. (apnews.com) The tariff at issue is President Donald Trump’s 10% global import surcharge, which took effect on February 24 after the Supreme Court struck down his broader earlier tariff program. The new measure is narrower than the first one, but it still reaches most imports and sits at the center of Trump’s trade agenda. (reuters.com) This case is not about whether tariffs are good economics. It is about whether Section 122 of the Trade Act of 1974 lets a president use a temporary import surcharge for up to 150 days to respond to “large and serious” United States balance-of-payments deficits. (congress.gov, law.cornell.edu) A trade deficit is the gap between what the United States buys and what it sells. A balance-of-payments problem is a bigger plumbing failure, where the country cannot comfortably finance those flows and the currency or financial system comes under strain. (piie.com, law.cornell.edu) That distinction drove the hearing. Reuters reported that judges questioned whether an ordinary large trade deficit is enough under the statute, while Axios said the panel kept circling one undefined phrase: what counts as a “balance-of-payments deficit” in 2026. (reuters.com, axios.com) The challengers are 24 mostly Democratic-led states and two small businesses, and they want the court to wipe out the tariff immediately. Bloomberg reported that their lawyers argued Section 122 belongs to an older monetary era, before the United States left the gold standard and before modern floating exchange rates changed how external imbalances work. (bloomberg.com) The administration says the law still works and that the president can act fast when international payments problems threaten the economy. In its February 25 proclamation, the White House said Section 122 authorizes a temporary surcharge of up to 15% and said the United States faced “fundamental international payments problems.” (whitehouse.gov, federalregister.gov) The awkward part for the administration is timing. Trump turned to Section 122 within hours of the Supreme Court’s February 20 decision striking down his previous tariffs, and the new 10% rate began on February 24, which made the move look less like a fresh policy design and more like a legal backup generator kicking on after the first system failed. (abcnews.com, apnews.com) The judges did not sound fully convinced by either camp. ABC News said the panel appeared skeptical of the challenge at points, while Politico described the judges as wrestling with the meaning of the statute and the limits of presidential power after the Supreme Court’s earlier ruling. (abcnews.com, politico.com) What businesses care about now is not just the 10% itself but the clock attached to it. Section 122 caps this kind of surcharge at 150 days unless Congress extends it, so even if Trump wins this round, the tariff still sits on a shorter legal leash than the broader powers he tried first. (law.cornell.edu, bdo.com) That is why this hearing matters beyond one tariff line. The court is deciding whether tariff risk in 2026 comes from elections and trade talks alone, or from a narrower question that sounds technical but is now central: whether an old law written for payments crises can carry a modern global tariff at all. (reuters.com, apnews.com)
