Trade court questions tariffs

Three judges on the U.S. Court of International Trade spent Thursday pressing a basic question: can a president put a 10% tax on imports from nearly every country by calling the trade deficit an emergency? Reuters reported the panel openly questioned whether a long-running gap between imports and exports fits a law written for an “unusual and extraordinary threat.” (reuters.com) The law at the center of the fight is the International Emergency Economic Powers Act, a 1977 statute that lets a president act after declaring a national emergency tied to a foreign threat. Its text says the trigger has to be an “unusual and extraordinary threat” that comes from outside the United States. (law.justia.com) Trump used that law in 2025 to roll out tariffs on most U.S. imports, including a 10% baseline tariff applied broadly across countries. The administration’s theory was that chronic trade imbalances and related economic harms were enough to unlock emergency powers. (congress.gov) That is a stretch because tariffs are usually Congress’s turf, the way tax rates are usually set by lawmakers rather than by a mayor with a bullhorn. The Court of International Trade said in a May 28, 2025 opinion that it did not read the emergency-powers law to give the president “unbounded authority” over tariffs. (cit.uscourts.gov) The challengers include companies that import consumer goods and wine, and states led by Oregon, all arguing the White House tried to turn an emergency statute into a blank check for trade policy. The two best-known cases are Learning Resources and V.O.S. Selections. (law.cornell.edu) The hearing Reuters described came after a much bigger ruling already landed this year. On February 20, 2026, the U.S. Supreme Court held in Learning Resources v. Trump and Trump v. V.O.S. Selections that the International Emergency Economic Powers Act does not authorize the president to impose tariffs. (congress.gov) That means Thursday’s argument was not really about whether the president has unlimited tariff power going forward. It was about the legal cleanup that follows a system built on a power the Supreme Court has now rejected, including what happens to tariffs already assessed and which claims still survive in lower courts. (congress.gov) (reuters.com) For companies, the problem is not abstract. If you import toys, machine parts, or food ingredients on six-month contracts, a 10% border tax changes your price sheet immediately, but a court fight can leave refunds, sourcing plans, and future contracts hanging for months. (reuters.com) Congress’s own research arm said the tariff cases raised separation-of-powers questions because they tested whether a president could use a sanctions law to do something as sweeping as rewrite U.S. tariff schedules. Once courts start calling a power “transformative” and “unheralded,” judges are signaling they want clearer words from Congress before allowing it. (congress.gov) (law.cornell.edu) So the immediate story is a courtroom argument, but the practical story is a waiting game. Until the last refund rule, final judgment, and replacement trade policy are settled, companies that buy from global supply chains are still making pricing decisions with one eye on customs invoices and the other on judges in lower Manhattan. (reuters.com)