Court tests Trump's 10% tariff

Three judges in New York spent hours on April 10 asking a basic question with trillion-dollar consequences: can a president put a 10% tax on imports from nearly every country just by pointing to the U.S. trade deficit. The tariff stays in place for now, but the judges did not sound fully convinced by either side. (reuters.com) (abcnews.com) The case is in the U.S. Court of International Trade, a federal court that handles customs and tariff fights. A coalition of 24 mostly Democratic-led states and two small businesses is trying to block the tariff that took effect on February 24. (cit.uscourts.gov) (reuters.com) A tariff is a tax paid when goods cross the border, so a 10% tariff means a $100 imported item can face a $10 charge before it reaches a store or factory. Companies can absorb that cost, pass it to customers, or cut orders. (abcnews.com) (reuters.com) This fight exists because the Supreme Court already knocked out most of Trump’s earlier sweeping tariffs in late 2025. After that loss, the White House switched to a different statute and announced this new 10% global tariff under Section 122 of the Trade Act of 1974. (abcnews.com) (whitehouse.gov) Section 122 is a narrow emergency tool Congress wrote for “fundamental international payment problems,” which is Washington language for a serious imbalance in money flowing into and out of the country. It lets a president impose temporary import restrictions for up to 150 days without waiting for Congress to vote first. (whitehouse.gov) (abcnews.com) The administration says the United States has exactly that kind of problem because it buys far more goods from the world than it sells. The White House fact sheet says Trump used Section 122 to “rebalance” trade relationships and address international payments problems, with the tariff starting at 12:01 a.m. Eastern time on February 24. (whitehouse.gov) The challengers say a trade deficit is not the same thing as the kind of payments crisis Congress had in mind in 1974. Their lawyers told the court the law was built for a world of exchange-rate emergencies and gold-era monetary stress, not a modern argument that America imports too much. (abcnews.com) (politico.com) The judges pushed on that point from both directions. Reuters reported that some questions sounded skeptical of the government’s claim that a persistent trade deficit alone unlocks Section 122, while ABC reported that the panel also seemed skeptical of the challengers’ request to strike the tariff down immediately. (reuters.com) (abcnews.com) That leaves importers in a familiar spot: paying first and waiting later. A retailer bringing in shoes, a factory buying machine parts, and a food company sourcing ingredients all have to plan prices and contracts while the legal basis for the tariff is still being argued in court. (reuters.com) (abcnews.com) Even a win for the challengers would not end the larger tariff story. Economists told ABC earlier that the administration could try again under other trade laws, so this case is partly about one 10% tariff and partly about how much room any president has to reshape trade without Congress. (abcnews.com 1) (abcnews.com 2) No ruling came from the bench on April 10, so the next signal will be a written opinion from the three-judge panel. Until that arrives, the tariff remains in force, the legal theory remains unproven, and every importer is still doing math on a policy that could either stick or vanish. (reuters.com) (abcnews.com)