Tariff legality in court

A court in Manhattan is deciding whether President Donald Trump can keep a 10% tax on imports from nearly every country, less than two months after the Supreme Court knocked out his earlier tariff plan on February 20, 2026. The hearing happened on April 10 before a three-judge panel of the United States Court of International Trade. (reuters.com) (cit.uscourts.gov) The new tariff took effect on February 24, 2026, and Trump set it at 10% across the board instead of targeting one country or one industry. Twenty-four mostly Democratic-led states and two small businesses sued to stop it. (reuters.com) (pbs.org) The legal fight is about a narrow statute from 1974 called Section 122 of the Trade Act, which lets a president temporarily raise tariffs when the United States has a “large and serious” balance-of-payments deficit. That power is capped at 15% and 150 days, which is why this case is about whether a 10% tariff can fit inside that older emergency tool. (politico.com) (congress.gov) A balance-of-payments deficit is not the same thing as a trade deficit. A trade deficit means the United States buys more goods from abroad than it sells, while a balance-of-payments deficit is a broader measure tied to money flowing in and out of the country. (politico.com) (congress.gov) That distinction is where the judges pressed the government. Reuters reported that the panel questioned whether a broad trade gap by itself is enough to trigger a law written for a different kind of international payments problem. (reuters.com) (politico.com) The administration is in this position because the Supreme Court ruled 6-3 on February 20 that the International Emergency Economic Powers Act does not let a president impose tariffs. Chief Justice John Roberts wrote that opinion, and it wiped out the much broader tariff system Trump had been using before he switched to the 1974 law four days later. (congress.gov) (reuters.com) (scotusblog.com) The challengers say the switch was basically a legal reroute after that Supreme Court loss. Their lawyers argued that Section 122 was built for the 1970s gold-and-dollar system, not for using a near-universal tariff as a standing trade policy in 2026. (reuters.com) (bloomberg.com) The government’s answer is that Congress left this emergency valve on the books, and a 10% tariff is still below the 15% ceiling written into the statute. The judges did not rule from the bench on April 10, so the tariff stays in place for now while the panel decides whether that reading of the law holds up. (politico.com) (reuters.com) For importers, the problem is not just the 10% itself but the stop-start pattern. Since February 20, companies have had one tariff regime struck down by the Supreme Court, a replacement regime imposed on February 24, and another court now weighing whether that replacement is lawful. (reuters.com 1) (reuters.com 2) If the trade court throws the tariff out, the administration would have to lean harder on slower trade laws like Section 232 for national security cases or Section 301 for unfair trade practices, both of which come with more process and narrower targets. If the court upholds it, Trump keeps a fast temporary tariff tool that can reach almost every import line at once. (thomsonreuters.com) (politico.com)