Court tests 10% tariff

A court in lower Manhattan is hearing a case that asks a blunt question: can a president slap a 10% tax on imports from almost every country after the Supreme Court already knocked down his last tariff plan in February. The hearing is in the U.S. Court of International Trade, a small federal court that handles fights over customs and trade law. (reuters.com) (scotusblog.com) The new tariff took effect on February 24, 2026, and a coalition of 24 mostly Democratic-led states plus two small businesses sued to stop it. Their argument is that the White House switched legal labels, not legal limits. (reuters.com) (cbsnews.com) The first round of Trump tariffs in this fight rested on the International Emergency Economic Powers Act, a 1977 law built for foreign threats and national emergencies. On February 20, 2026, the Supreme Court said that law did not let a president remake global trade on his own. (scotusblog.com) (thehill.com) Within hours, the administration reached for a different law: Section 122 of the Trade Act of 1974. That statute lets a president impose a temporary import surcharge of as much as 15% for no more than 150 days, but only for what the law calls a fundamental international payments problem. (whitehouse.gov) (law.cornell.edu) That “payments problem” language is old trade-law jargon for the country’s external accounts, not a general complaint that imports are too high. The White House proclamation said the United States had a large and serious balance-of-payments deficit and used that finding to justify the 10% surcharge. (federalregister.gov) (law.cornell.edu) The states say that reading is far too broad because Section 122 was written as a short-term emergency valve, not a standing license for across-the-board tariffs. They are asking the trade court to void the tariff and order refunds for duties already collected. (supplychaindive.com) (carolinajournal.com) The administration says Congress gave presidents this tool on purpose and capped it at 15% and 150 days on purpose too. In that telling, a 10% tariff is exactly the kind of temporary move Section 122 was designed to allow while the White House decides whether to pursue longer trade actions under other laws. (whitehouse.gov) (hklaw.com) What makes this case bigger than one tariff bill is the calendar. Section 122 expires after 150 days unless Congress extends it, so if judges also read the law narrowly, presidents would have much less room to use fast, unilateral tariffs as an all-purpose economic weapon. (law.cornell.edu) (bdo.com) That matters to importers because a tariff is collected at the border first and argued over in court later. For a small business bringing in shoes, machine parts, or kitchen goods, a 10% surcharge can hit cash flow immediately even if a judge eventually says the tax never should have been charged. (reuters.com) (cbsnews.com) The judges do not need to decide whether tariffs are smart economics. They need to decide whether Congress actually handed this president this exact power, under this exact statute, after the Supreme Court already shut one door in February. (reuters.com) (scotusblog.com) If the court upholds the tariff, the White House keeps a short-term lever that can move prices and supply chains without waiting for Congress. If the court blocks it, one of the fastest tools in modern U.S. trade policy gets a lot smaller, and every future tariff plan will have to start with a much tighter reading of the law. (reuters.com) (bloomberglaw.com)