Court Battles

Trump’s latest tariffs face trade court showdown

by Zach Schonfeld - 04/10/26 6:00 AM ET

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by Zach Schonfeld - 04/10/26 6:00 AM ET

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President Trump’s new tariffs are headed for a court showdown Friday.

The U.S. Court of International Trade will take the bench to consider Trump’s 10-percent global levy he imposed after the Supreme Court struck down his previous tariffs as illegal over his use of emergency powers to impose them.

Democratic-led states and small businesses are challenging the new round, hoping it’ll meet the same fate.

“This is another case where the President invokes a statute to impose whatever tariffs he wants, its limits be damned,” the states wrote in court filings.

Here’s what to know about the latest case.

Legal challenge focuses on ‘balance of payments’

Trump made fresh moves on tariffs the same day the Supreme Court in February invalidated his previous tariffs.

Those relied on emergency authorities. The president now points to Section 122 of the Trade Act of 1974.

It authorizes the president to unilaterally surcharge imports up to 15 percent for up to 150 days “to deal with large and serious United States balance-of-payments deficits.”

Trump used it to impose a 10 percent tariff on most goods imported from across the globe.

“I have been informed by my advisors that the United States balance-of-payments position, under any reasonable understanding of the term in the context of section 122, is currently a large and serious deficit,” Trump’s proclamation reads.

His critics say Trump’s definition only encapsulates the U.S trade deficit. That’s only one part of the equation, they argue, and the president is ignoring inflows of foreign capital and financial investment that “balance” it.”

In fact, they say a balance-of-payments crisis has been impossible ever since the country moved off the gold standard and fixed exchange rate system in the 1970s.

“A balance of payments crisis is a currency crisis that was of great concern when Congress enacted Section 122, but which can no longer exist,” the states wrote in court filings.

States and small businesses lead challenge

On the other side of the courtroom Friday will be two small businesses and two dozen Democratic-led states.

They filed separate challenges against Trump’s new tariffs, and their cases will be heard together.

The two companies are spice and e-commerce business Burlap & Barrel and Basic Fun!, a toy company that designs and markets brands like Tonka, Lincoln Logs and K’nex.

“When these tariffs were first announced last April, we made two promises: we would not raise our prices, and we would not ask our partner farmers to absorb the costs,” Burlap & Barrel wrote in a notice to customers on its website. “A year later, we’re proud to say we’ve kept those promises. This lawsuit is about protecting our ability to continue doing that.”

They’re represented by the Liberty Justice Center. The libertarian public-interest firm was behind the previous tariff case at the Supreme Court, and now it’s suing again.

Twenty-four Democratic-led states will fight the president’s tariffs alongside them. The coalition is led by Oregon, Arizona, California and New York.

The challenge has garnered outside support from various former economic officials like former Treasury Secretary Janet Yellen, the Cato Institute and Advancing American Freedom, a conservative advocacy group founded by former Vice President Pence.

“The tariffs being collected even now are, again, illegal, and the importers who are paying them are being set up for ongoing hardship when they are inevitably entitled to a refund in the coming months,” the group wrote in a friend-of-the-court brief.

The case heads to a three-judge panel.

It comprises two appointees of former President Obama, Judge Mark Barnett and Judge Claire Kelly, and one appointee of former President George W. Bush, Judge Timothy Stanceu.

That’s a different trade court panel than the one that considered Trump’s previous tariffs and ruled against him.

Refund update

As the battle rages over Trump’s Section 122 tariffs, the fight over refunds of Trump’s levies invalidated by the Supreme Court is moving ahead.

U.S. Customs and Border Protection (CBP) says it’s working on staging an automated system to process the $166 billion in refunds plus interest.

Brandon Lord, a senior CBP official who helps lead tariff implementation efforts, told the trade court last week that each of the system’s four components are now between 60 and 85 percent developed.

CBP, the federal agency in charge of collecting tariffs, is hoping for it to be ready by an April 20 deadline. When it launches, officials have said it will be capable of pr