NEW YORK — President Donald Trump’s temporary 10% tariff on most imports ran into sharp skepticism Friday at the U.S. Court of International Trade, where a three-judge panel pressed administration lawyers on whether a routine trade deficit can legally qualify as the kind of “balance-of-payments” problem Congress targeted in Section 122 of the Trade Act of 1974, April 10, 2026.
The hearing matters because this levy is the White House’s fallback after the Supreme Court struck down Trump’s broader emergency-tariff program in February, leaving judges to decide whether an older trade statute can keep a global import tax alive.
Trump tariffs hit a tougher legal test
As Reuters reported from the hearing, the judges were considering parallel challenges from 24 states and from small businesses, and they repeatedly pressed the administration on whether a trade gap can be treated as a balance-of-payments crisis. Judge Timothy Stanceu was especially pointed in questioning whether Congress meant those two ideas to be interchangeable.
The pressure is also formal and specific. In a multistate challenge led by New York Attorney General Letitia James, the states argue Trump is trying to use Section 122 to do by a new route what the Supreme Court already rejected under the International Emergency Economic Powers Act. They are asking the court to invalidate the tariff and order refunds for tariff costs paid by state agencies.
Why Section 122 matters for Trump tariffs
At issue is Section 122 of the Trade Act of 1974, which allows a temporary import surcharge of up to 15% for 150 days when a president finds fundamental international payments problems. In Trump’s Feb. 20 proclamation, the White House set the current worldwide rate at 10%, made it effective Feb. 24, and scheduled it to run through July 24 unless Congress extends it.
AP reported from the same hearing that judges kept returning to what Congress meant by “balance-of-payments deficits” in a provision that had never before been used to impose tariffs. That history matters because the challengers say Section 122 was written for short-term monetary stress in the gold-linked 1970s, not for a modern trade gap in today’s floating-currency system.
How Trump tariffs got here
The continuity matters. When the original 10% baseline tariff began in April 2025, Trump cast it as a reset of U.S. trade policy. When the Court of International Trade blocked most of his IEEPA-based tariffs in May 2025, the legal risk around that emergency-powers approach became unavoidable. And when the Supreme Court struck down that strategy in February 2026, Trump responded within hours by unveiling the Section 122 version now under review.
That is why Friday’s hearing mattered beyond the current 10% rate. If the court says Section 122 cannot be stretched to cover a normal U.S. trade deficit, Trump loses the fastest legal bridge he built after the Supreme Court ruling. No ruling timetable was announced Friday, so the surcharge remains in place for now while the White House waits to see whether this second legal theory for Trump tariffs can survive where the first one failed.
