Court questions 10% tariffs

A federal trade court spent Friday pressing the Trump administration on whether a routine trade deficit can legally support its new 10% tariff on most imports. (politico.com) (reuters.com) The case was argued April 10 before a three-judge panel of the United States Court of International Trade in New York. The plaintiffs are 24 mostly Democratic-led states and two small businesses, and the 10% tariffs took effect on February 24. (apnews.com) (reuters.com) Judges focused on Section 122 of the Trade Act of 1974, the statute Trump invoked after the Supreme Court rejected his earlier tariff program under the International Emergency Economic Powers Act on February 20. The administration says Section 122 lets the president impose temporary import surcharges to address “fundamental international payments problems.” (supremecourt.gov) (whitehouse.gov) Section 122 is narrower than the tariffs Trump tried before. The law caps a temporary import surcharge at 15% and 150 days unless Congress extends it. (law.cornell.edu) (federalregister.gov) That limit is why this case matters beyond one hearing. If the court rules that a long-running trade gap is not the kind of “balance-of-payments” problem Congress meant in 1974, the administration loses the fastest remaining path for broad global tariffs. (axios.com) (congress.gov) Lawyers for the states and businesses argued that Section 122 was written for currency and monetary stress, not for a persistent goods-trade deficit that the United States has run for decades. Judges repeatedly asked government lawyers to define the “balance-of-payments deficit” the statute requires. (reuters.com) (indiatoday.in) The administration answered that the trade deficit is part of a broader international payments imbalance and said courts should defer to the president’s judgment on that finding. Trump’s February proclamation said the surcharge was needed to address “fundamental international payments problems” and to rebalance trade. (whitehouse.gov) (reuters.com) The hearing follows a bigger loss for the White House less than two months ago. In Learning Resources v. Trump, the Supreme Court held 6-3 that the International Emergency Economic Powers Act does not authorize tariffs, wiping out the legal basis for Trump’s earlier emergency tariff program. (supremecourt.gov) (scotusblog.com) For importers, the calendar is part of the fight. The current Section 122 tariffs are set to run through July 24, 2026, unless Trump ends them sooner or Congress votes to extend them. (federalregister.gov) (kelleydrye.com) The judges did not rule from the bench on April 10. Their eventual decision will decide whether Trump’s fallback 10% tariffs survive long enough to reach that July deadline. (apnews.com) (politico.com)