Tariff ruling faces court test
A federal trade court heard arguments this week over whether the administration lawfully imposed a 10% global tariff, and judges pressed on whether a large trade deficit is enough legal justification. The hearing suggests the tariff program’s legal basis is being seriously questioned, which could affect importers' planning if the rules are narrowed or overturned. (chicagotribune.com)
A federal trade court spent hours on April 10 testing whether President Donald Trump had legal authority to impose a 10% tariff on nearly all imports. (reuters.com) The case is before a three-judge panel of the United States Court of International Trade in New York, where 24 mostly Democratic-led states and two small businesses asked judges to block the tariff order that took effect on February 24. (opb.org) Judges pressed government lawyers on whether a large U.S. trade deficit counts as the kind of “balance-of-payments” problem Congress had in mind when it passed Section 122 of the Trade Act of 1974. (axios.com) That matters because Section 122 lets a president impose a temporary import surcharge of up to 15% for 150 days without new legislation, but only for a narrow set of international payments problems. (law.cornell.edu) Trump turned to that law after the Supreme Court ruled on February 20, 2026, that he could not use the International Emergency Economic Powers Act to impose his broader earlier tariffs. Chief Justice John Roberts wrote the 6-3 decision. (scotusblog.com) The administration’s February 24 proclamation said the United States faced “fundamental international payments problems” and cited trade imbalances as the reason for a 10% temporary import surcharge. (federalregister.gov) Lawyers for the states and businesses told the court the new tariff is a rerun of the old policy under a different statute, and they argued Section 122 was written for currency and payments crises, not a long-running goods trade gap. (politico.com) Justice Department lawyers said the statute gives the president room to act when imports and cross-border payments are badly out of balance, and they defended the 10% rate as well within the law’s 15% ceiling. (whitehouse.gov) No ruling came from the bench on April 10, but the hearing showed the court is focused on the statute’s limits, not just the administration’s economic case. Importers now are waiting to see whether the tariff survives through the rest of Section 122’s 150-day window. (nbcnews.com)
