Federal Court Hears New Case on Trump Tariffs

The centerpiece of President Donald Trump’s economic policy—broad tariffs on global imports—is facing a renewed legal challenge.

The U.S. Court of International Trade, a specialized court based in New York, heard oral arguments Friday in a case seeking to overturn the temporary tariffs President Trump implemented after the Supreme Court ruled against his earlier, more expansive tariff plan in February.

In his initial effort to impose global tariffs, President Trump invoked the 1977 International Emergency Economic Powers Act (IEEPA). He used the law to declare the United States’ longstanding trade deficit a national emergency and imposed double-digit tariffs on imports worldwide in response.

The administration interpreted IEEPA as granting the president authority to impose tariffs of varying sizes on any country at his discretion.

On Feb. 20, the Supreme Court ruled that IEEPA does not authorize the use of tariffs to address national emergencies, effectively blocking that approach.

Following the decision, President Trump turned to Section 122 of the Trade Act of 1974. This provision allows the president to impose global tariffs of up to 15% for a period of 150 days, after which congressional approval is required for any extension.

The administration subsequently introduced tariffs of 10% under Section 122. President Trump has indicated he may increase them to the 15% maximum, though that step has not yet been taken. The current tariffs are set to expire on July 24.

Section 122 is intended to address what the statute describes as “fundamental international payments problems.” A central legal question is whether this language applies to trade deficits, defined as the difference between the value of goods the United States imports and exports.

The provision was created during the financial challenges of the 1960s and 1970s, when the U.S. dollar was tied to gold. At that time, foreign governments were exchanging large amounts of dollars for gold at fixed rates, raising concerns about the stability of the U.S. currency and global financial markets. Critics argue that the provision may no longer be applicable under the modern monetary system, in which the dollar is not linked to gold.

In a court filing last year, the Justice Department stated that Section 122 did “not have any obvious application” to trade deficits, describing them as “conceptually distinct” from international payments problems.

However, the Court of International Trade noted in a separate decision last year that Section 122 could be used to address trade deficits, suggesting that the administration had an alternative to invoking IEEPA.