The centerpiece of President Donald Trump’s global trade-tariff plan returned to court Friday, when the U.S. Court of International Trade in New York heard oral arguments in a case aimed at overturning the president’s temporary import taxes. The temporary tariffs—set at 10%—were adopted after the Supreme Court in February blocked Trump’s earlier, broader tariff strategy that relied on emergency powers.
At the heart of the new dispute is which statute the executive branch can use to justify sweeping tariffs on imports, and how courts should read decades-old congressional language in light of today’s trade conditions. The court heard arguments from both plaintiffs challenging the tariffs and the government defending the authority for the program, in a hearing that lasted more than three hours.
Trump’s initial push for global tariffs relied on the 1977 International Emergency Economic Powers Act, which he used last year by declaring the country’s trade deficit a national emergency. The approach interpreted the statute broadly, using it to impose double-digit worldwide taxes on imports, and to do so depending on the administration’s view of what constituted the emergency and which countries were targeted.
On Feb. 20, the Supreme Court struck down those IEEPA-based tariffs, saying the emergency law did not authorize the use of tariffs to counter national emergencies. Following that defeat, Trump turned to an alternative he said could be used without the same emergency-powers premise: Section 122 of the Trade Act of 1974. That provision, as described in court arguments, allows the president to impose global tariffs of up to 15% for 150 days, after which congressional approval is needed to extend them.
Trump announced 10% tariffs under that authority after the Supreme Court ruling and said he would raise them to the maximum 15%, though the program is scheduled to expire July 24. In the new case heard Friday, two dozen states and some businesses challenge whether Section 122 actually supports tariffs aimed at trade deficits, as opposed to the kinds of “fundamental international payments problems” Congress referenced when it adopted the provision.
During the hearing, the judges pressed lawyers on the meaning of key statutory terms, including what Congress meant by “balance-of-payments deficits” when it passed Section 122 and what the phrase means in the current economic context. One argument from the challengers’ side centered on the idea that the provision was designed for an earlier set of international monetary conditions, and that those conditions do not map cleanly onto modern trade deficits.
Liberty Justice Center, which represents some plaintiffs, argued for a narrow reading of the authority. Jeffrey Schwab, senior counsel and director of litigation for the group, said the judges asked “tough questions of all sides” and were “genuinely trying to find out what Congress meant when it passed section 122,” according to the hearing coverage.
Another trade lawyer, Ryan Majerus, a partner at King & Spalding and a former U.S. trade official, predicted the court would likely defer to the president and let the Section 122 tariffs stand. Majerus said he “would be stunned if the challengers prevail” and argued that the tariffs are temporary and that the court may give the president broad discretion in light of the July 24 expiration date.
The competing interpretations draw on how Section 122 developed during financial crises when the U.S. dollar was tied to gold. The coverage described critics’ view that the “balance-of-payments” framework that gave rise to the provision was tied to those older currency conditions, and that the concept may therefore be obsolete as applied to contemporary trade deficits.
The legal arguments also included tensions within the government’s own earlier positions and the trade court’s prior reasoning. In a court filing last year, the U.S. Justice Department argued that the president needed to invoke IEEPA because Section 122 did not have “any obvious application” in fighting trade deficits, which it described as “conceptually distinct” from payments problems. At the same time, the trade court wrote last year that the IEEPA tariffs could be struck down because Section 122 was available to counter trade deficits.
In a statement reported in the court coverage, Attorney General Dan Rayfield of Oregon, one of the states challenging the Section 122 tariffs, said he is eager for a decision. Rayfield said, “We are hopeful to get a result sooner than later,” adding that when the president continues an action the plaintiffs view as unlawful, they want courts to respond “as quickly as we can.”
Paul Wiseman of AP reported from Washington, and Lindsay Whitehurst contributed to the story.