Across three hours of oral arguments on Friday, a panel of judges appeared skeptical of a legal challenge to the 10% global tariff imposed by President Donald Trump after the Supreme Courtstruck downhis first round of tariffs earlier this year.
The lengthy hearing centered on whether a 1974 law givesPresident Trumpthe power to impose the tariffs for 150 days without approval from Congress, based on the United States' trade deficit.
The suit was brought by 24 states as well as the toy company behind Care Bears and Lincoln Logs, and a spice importer.
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Brian Marshall, arguing for the plaintiffs, told the panel of three judges on the Court of International Trade that the Trump administration is misusing the law that allowed tariffs to account for a "balance of payments deficit" -- which he said experts unanimously believe is distinct from a "trade deficit."
Judge Timothy C. Stanceu repeatedly pushed back on that claim, remarking that a "balance of payments deficit" could be created by a trade imbalance.
"In other words, a fundamental international payments problem cannot be something where the United States has to pay out a lot of money. It can also be something where there is an imbalance created by large trade surpluses in which case they wanted to let more imports in," Judge Stanceu said.
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The judges also appeared skeptical that the states suing the Trump administration had the legal standing to bring the case, though they appeared more receptive to the two small businesses that also challenged the tariffs: Basic Fun, a toy company, and Burlap and Barrel, which sells single-origin kitchen spices.
"I think there's a distinction, for example, between some of the private party plaintiffs where they said, 'We know we have X number of containers that are coming in within a certain period of time.' I'm not sure that I see the same degree of clarity with regard to the state plaintiffs other than we buy stuff," said Chief Judge Mark A. Barnett.
However, the judges also appeared to push back on some of the arguments from the Trump administration, including the claim that earlier litigation related to the International Emergency Economic Powers Act -- which the Supreme Court concluded does not give the president the right to impose tariffs -- suggested that the 1974 law now in question gives Trump that power.
"This case has nothing like that. This case has a statute that expressly allows the imposition of tariffs or quotas. So we're in a whole different universe now," said Stanceu. "This one turns on balance of payments deficits, a term that was not involved in the IEEPA case."
Assistant Attorney General Brett Shumate urged the court to affirm that the 1970s law gives Trump temporary tariff power, arguing Congress was clear in giving presidents broad latitude to address the deficits in question.
"The fundamental problem that exists today also existed in 1971, and that was the problem that Congress was trying to give presidents beyond President Nixon, the discretion to address by identifying balance of payments problems," Shumate said.
The court did not signal when or how they might rule, though a decision is expected sometime in the coming months. Regardless of the ruling, tariffs are set to expire in July when the 150-day window expires.
According to the Yale Budget Lab, a nonpartisan policy research center, Trump's tariffs -- including the broad Section 122 tariffs, as well as metal and pharmaceutical tariffs imposed under different authorities -- are estimated to cost every household between $760 and $940 if the Section 122 tariffs expire within 150 days. If Congress were to extend the tariffs, the price impact could be between $1,200 and $1,500 for each household.
