U.S. court weighs 10% global tariff

A three-judge court in New York spent Friday on a basic question with huge reach: can a president put a 10% tax on nearly everything the country imports by himself, or does Congress have to say yes first. The case is in the U.S. Court of International Trade, and the challengers are 24 states plus two small businesses. (reuters.com) The tariff at issue took effect on February 24, 2026, after the Supreme Court knocked out most of the administration’s earlier tariffs on February 20. That earlier ruling said the International Emergency Economic Powers Act of 1977 does not let a president create tariffs just by declaring an emergency. (supremecourt.gov, crsreports.congress.gov) So the administration switched laws. Instead of the emergency-powers law, it used Section 122 of the Trade Act of 1974, a narrower statute written for “fundamental international payments problems,” which is Washington language for a serious balance-of-payments strain. (whitehouse.gov, law.cornell.edu) That law is not a blank check. Section 122 caps a temporary import surcharge at 15% and 150 days unless Congress extends it, which is why the current tariff is 10% and why the legal fight is happening so fast. (law.cornell.edu, federalregister.gov) The states and businesses say the White House is trying to rebuild, with a different statute, the same broad tariff wall the Supreme Court just rejected. Their argument is that Section 122 was designed for short, specific balance-of-payments emergencies, not as an all-purpose tool for shrinking a long-running trade deficit. (reuters.com, scotusblog.com) The administration’s answer is simpler: Congress already gave the president this exact backup tool in 1974, and the statute literally mentions import surcharges. In its February proclamation, the White House pointed to the U.S. goods trade deficit, the dollar, and broader international payments pressures as the trigger. (whitehouse.gov, federalregister.gov) This is why the case matters beyond trade lawyers. A tariff is a tax collected at the border, so importers have to decide whether to eat the cost, pass it to customers, or cut somewhere else like hiring, inventory, or pay increases. (budgetlab.yale.edu, federalreserve.gov) The uncertainty is its own cost even before the judges rule. Federal Reserve research says rising uncertainty leads firms to delay investment and hiring, and a March 2026 survey from the Federal Reserve Bank of Richmond said finance chiefs still expected tariff-driven price increases even while broader growth forecasts held up. (federalreserve.gov, richmondfed.org) That same fog reaches boardrooms and payroll spreadsheets. Thomson Reuters said tariff volatility is reshaping supply-chain planning, and compensation advisers have been warning that companies are rethinking bonus targets and pay plans because one court ruling can change costs for the rest of the year. (tax.thomsonreuters.com, pearlmeyer.com) If the court blocks the tariff, the administration loses the fastest replacement it found after the Supreme Court defeat on February 20. If the court upholds it, presidents will have a clearer road to impose short-term global import taxes under Section 122, at least up to the law’s 15% and 150-day limits. (reuters.com, law.cornell.edu)