Trade court reviews 10% global tariff
A U.S. trade court heard a challenge to the administration’s 10% global tariff after states and small businesses argued the levy sidesteps a Supreme Court ruling that struck down previous tariffs. The case could reshape policy risk for companies exposed to global supply chains if the court finds the tariff unlawful. (reuters.com)
A court in Manhattan spent Friday asking a simple question with billion-dollar consequences: can a president slap a 10% tax on imports from nearly every country by switching to a different statute after the Supreme Court already killed the first version of the policy. The hearing was before a three-judge panel of the United States Court of International Trade. (reuters.com) (cit.uscourts.gov) The tariff being challenged took effect on February 24, 2026, and it covers imported goods from every country unless an exemption applies. Twenty-four mostly Democratic-led states and two small businesses sued to stop it. (reuters.com) (apnews.com) This fight exists because the Supreme Court changed the rules on February 20, 2026. In a 6-3 decision, the justices struck down the administration’s earlier sweeping tariffs that had been imposed under the International Emergency Economic Powers Act, a 1977 law built for national emergencies. (reuters.com) (scotusblog.com) Within hours, the White House reached for a backup tool called Section 122 of the Trade Act of 1974. That law lets a president impose a temporary import surcharge of up to 15% for no more than 150 days if there are “fundamental international payments problems.” (whitehouse.gov) (law.cornell.edu) Think of the legal argument like swapping keys after one key broke in the lock. The states and businesses say the administration is trying to reopen the same door the Supreme Court just closed, while using a half-century-old balance-of-payments law that was written for currency and trade-account stress, not as a general all-purpose tariff button. (reuters.com) (bloomberg.com) The administration’s answer is that this is a different law with different limits. Customs and Border Protection told importers the 10% duty would run for 150 days under Section 122, which is exactly the cap Congress wrote into the statute. (cbp.gov) (federalregister.gov) That 150-day clock is one reason the case matters right now. If judges eventually say the tariff was unlawful, companies that paid the duty could pursue refunds, and importers would have to recalculate costs on everything from components to finished goods that crossed the border after February 24. (thomsonreuters.com) (reuters.com) The courtroom debate on Friday turned on old statutory language that rarely gets this kind of spotlight. Judges pressed lawyers on whether the United States actually faces the kind of “large and serious” international payments problem Section 122 was designed for, and whether Congress meant that law to support a tariff this broad. (politico.com) (law.cornell.edu) For companies, this is less about one 10% line item than about whether trade policy can keep changing by executive order every time one legal theory fails. A ruling against the tariff would not end the administration’s trade agenda, but it would narrow one more path presidents can use to raise import taxes without a new act of Congress. (cfr.org) (reuters.com)
