Tariffs face fresh legal test

A trade court in New York spent Friday asking a basic question with billion-dollar consequences: after the Supreme Court knocked out the first tariff plan in February, did the administration actually find a legal backup, or just rename the same idea under a different statute? (politico.com) The tariff now under attack is a 10 percent tax on many imports that took effect on February 24, 2026. The case was argued on April 10 before the United States Court of International Trade, a specialized federal court that handles customs and trade disputes. (nytimes.com, pbs.org) This fight exists because the Supreme Court ruled on February 20, 2026 that the International Emergency Economic Powers Act does not let a president impose tariffs. That decision wiped out the administration’s earlier “Liberation Day” and fentanyl-related tariff program and forced a same-day scramble for another legal route. (seyfarth.com, perkinscoie.com) The replacement route was Section 122 of the Trade Act of 1974. That law lets a president impose a temporary import surcharge for up to 150 days if the United States has a “large and serious” balance-of-payments deficit, which is a problem with money flowing out of the country in international transactions. (abcnews.go.com, axios.com) That phrase became the whole hearing. Judges pressed both sides on what “balance-of-payments deficit” means in 2026, because the United States has long run a trade deficit in goods while still attracting huge capital inflows that finance that gap. (axios.com, abcnews.go.com) The challengers are 24 mostly Democratic-led states and two small businesses. They argue Section 122 was written for a different monetary era and cannot be stretched into a catch-all power for a broad global tariff after the Supreme Court already rejected the emergency-powers version. (bloomberg.com, detroitnews.com) The administration says the new tariff is narrower than the old one and fits the text of Section 122 because persistent trade deficits justify a temporary surcharge while officials pursue a longer-term fix. One reason this case is tricky is that Section 122 really does mention temporary surcharges, so the judges are not looking at the exact same legal theory the Supreme Court rejected in February. (politico.com, abcnews.go.com) Some coverage of the hearing described the panel as openly doubtful that anyone had a clean definition of the key term. Other coverage said the judges sounded skeptical of the challengers too, which usually means both sides left court without an obvious win. (axios.com, abcnews.go.com) For importers, the practical problem is timing. A tariff that can exist for a few weeks, get frozen, get revived on appeal, and then get replaced again is hard to price into a contract for auto parts, machinery, toys, or clothing that may not arrive at a United States port for months. (nytimes.com, politico.com) There is already a second layer of uncertainty behind this case: refunds. After the Supreme Court’s February ruling, the Court of International Trade ordered Customs and Border Protection to refund roughly $165 billion in duties collected under the invalidated emergency-power tariffs, and lawyers are still warning companies that appeals or processing delays could slow the money. (skadden.com, nortonrosefulbright.com) So the next decision is not just about whether this 10 percent tariff survives. It is also a test of whether the White House can keep rebuilding tariff policy from one statute to the next after courts knock the last version down. (foxnews.com, thehill.com)