Trade court tests tariffs
A federal trade court heard challenges to President Trump’s 10% global tariff, with judges digging into whether Section 122 of the Trade Act actually authorises such broad duties. Plaintiffs — including states and small businesses — argue the statute was never intended to address today’s trade‑deficit politics, and the court pressed the government on that point. The hearing left the legal question unsettled: judges probed the administration’s theory seriously but did not decisively side with either camp. (reuters.com)(pbs.org)(abcnews.com)
A three-judge panel in New York spent hours on Friday asking a narrow question with a huge price tag: does a 1974 trade law really let a president slap a 10% tariff on imports from nearly every country on Earth for 150 days without Congress? The judges did not answer it from the bench. (apnews.com) The case is in the U.S. Court of International Trade, a specialized federal court that handles customs and tariff disputes. The tariff being challenged took effect on February 24, 2026, after the White House switched legal strategies. (pbs.org) That switch happened because the Supreme Court knocked out Trump’s earlier tariff program in February, ruling that the International Emergency Economic Powers Act did not give him power to impose tariffs. Within days, the administration moved to Section 122 of the Trade Act of 1974 instead. (pbs.org) (whitehouse.gov) Section 122 is an old backup tool built for “balance-of-payments” trouble, which is basically a countrywide cash-flow problem with the rest of the world. The statute says a president can impose a temporary import surcharge of up to 15% for no more than 150 days unless Congress extends it. (law.cornell.edu) (federalregister.gov) Trump used that authority for a 10% global tariff and argued the United States’ long-running trade deficit counts as the kind of “large and serious” international payments problem the law was written for. The White House proclamation says the measure is temporary and tied to those payment imbalances. (whitehouse.gov) (federalregister.gov) The challengers say that reading stretches the law far past its original use. Twenty-four mostly Democratic-led states and two small businesses told the court Section 122 was written for currency and payments emergencies, not for using tariffs as a standing answer to modern trade politics. (reuters.com) (abcnews.go.com) That is why the hearing kept circling one fuzzy phrase: “balance-of-payments deficit.” Judges pressed government lawyers on what that term means in 2026, because the United States left the gold-standard world that shaped a lot of 1970s trade law decades ago. (axios.com) (bloomberg.com) The administration did not get a free pass, but the plaintiffs did not get an obvious win either. ABC reported the judges appeared skeptical of the challenge at points, while Reuters and PBS described a bench that seriously tested the government’s theory without clearly embracing either side. (abcnews.go.com) (reuters.com) (pbs.org) One practical wrinkle is the clock. Section 122 only allows 150 days unless Congress acts, so the fight is partly about whether courts should stop a short-term tariff now or let it run while the legal argument keeps moving. (law.cornell.edu) (aljazeera.com) If the court upholds the tariff, presidents will have a tested route to impose broad import taxes under a half-century-old statute with only temporary limits. If the court strikes it down, Trump loses the fallback plan he reached for after the Supreme Court shut the first one off. (politico.com) (pbs.org)
