A three-judge panel at the U.S. Court of International Trade heard oral arguments Friday in a new legal challenge to President Donald Trump’s temporary global tariffs, setting up another round of scrutiny of how far presidential tariff authority extends. The case is the latest test of the government’s approach after the Supreme Court in February struck down Trump’s preferred path for imposing broad import taxes, leaving the administration to rely on a different statutory provision.
Trump’s first attempt at sweeping global tariffs invoked the 1977 International Emergency Economic Powers Act, which allowed the president to declare a national emergency tied to the country’s trade deficit and impose double-digit taxes on imports. The Supreme Court rejected that approach on Feb. 20, ruling that the emergency powers law did not authorize tariffs as a tool for addressing national emergencies.
After the Supreme Court decision, Trump turned quickly to an alternative, invoking Section 122 of the Trade Act of 1974. Under that provision, the president can impose tariffs on global imports up to 15% for up to 150 days, with congressional approval needed to extend them beyond that period. Trump announced 10% tariffs after the Supreme Court ruling and said he would raise them to 15%, according to the court filings and arguments described in the oral hearing.
The tariffs are scheduled to expire July 24, a timeline that shaped the arguments before the specialized court. The hearing lasted more than three hours as the judges pressed both the plaintiffs and the government on key statutory language and on what Congress meant when it wrote the provision decades ago.
Lawyers representing the challengers focused on whether Section 122 properly applies to trade deficits, arguing that the provision is meant for different kinds of “payments problems.” Section 122 targets what it calls “fundamental international payments problems,” and the central dispute in the hearing included whether that description encompasses trade deficits—defined in the case context as the gap between what the United States sells abroad and what it buys from other countries.
The judges asked detailed questions about how to understand specific terms, including what “balance-of-payments deficits” meant when Congress used that phrase in the Trade Act and what the phrase means in the present. The court also examined whether the provision’s original purpose aligns with how the administration has used it to justify across-the-board global tariffs.
Representatives for the plaintiffs included Jeffrey Schwab, senior counsel and director of litigation for the Liberty Justice Center, which represents some of the challengers. He 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 account. Another lawyer, Ryan Majerus of King & Spalding and a former U.S. trade official, said he believed the challengers’ effort faced an uphill fight.
“I would be stunned if the challengers prevail,’’ Majerus said, and he argued the judges were likely to defer to the president and allow the Section 122 tariffs to remain. He pointed to the tariffs’ limited duration, saying, “I just don’t see them sticking their neck out on this one, given how temporarily it’s in place and how much discretion these courts give to the president,’’ in the description of the hearing.
The hearing also highlighted what the record says about competing understandings of Section 122’s scope. Critics argued that Section 122 was created during financial crises in the 1960s and 1970s, when the U.S. dollar was tied to gold and other countries could exchange dollars for gold at a set rate, raising the risk of currency disruption and market chaos. Because the dollar is no longer linked to gold, critics say the statutory rationale is outdated for modern tariff use tied to trade balances.
Legal arguments described in court papers included the government’s own earlier views. The challengers’ questions and the court context pointed to an unusual position in prior filings, in which the Justice Department argued that Trump had needed to invoke the emergency powers law because Section 122 did not have “any obvious application” to trade deficits, which it described as “conceptually distinct” from payments problems.
The litigation backdrop includes the trade court’s prior role in the emergency-powers dispute. Last May, the court struck down Trump’s earlier tariffs based on the emergency powers argument after oral arguments in that case, and in the court’s decision it indicated that Trump did not need to rely on the emergency powers because Section 122 was available to counter trade deficits. The new hearing followed from that shift in statutory framing.
Attorney General Dan Rayfield of Oregon, a state plaintiff, said the challengers are seeking a prompt ruling. “We are hopeful to get a result sooner than later,’’ Rayfield said, adding, “When the president continues to do an unlawful action and take money out of the pockets of Americans, we want a response as quickly as we can from the courts.’’
Paul Wiseman reported from Washington. AP Writer Lindsay Whitehurst contributed.