Trump’s Pared-Back Tariffs Return to Trade Court Under New Legal Rationale

President Trump’s latest round of tariffs, imposed after the Supreme Court struck down his last efforts, are headed back to the U.S. Court of International Trade thanks to a lawsuit from two dozen Democratic-led states. A full court ruling and appellate process may not be needed this time, however, as the law under which Mr. Trump has levied the tariffs sets an expiration date for them if Congress does not act. Mr. Trump imposed a ten percent tariff on all foreign goods just days after the Supreme Court rule 6–3 that he overstepped his authority by unilaterally imposing the earlier import taxes. The president went so far as to criticize the justices to their faces at his State of the Union speech just weeks later. His “Liberation Day” tariffs were constantly shifting. He told Brazil to halt a trial for a conservative former president who was charged with trying to overturn his own electoral defeat and instigate a military coup, or face new tariffs. Mr. Trump admitted he hit Switzerland with an import tax because he didn’t like how the country’s president spoke to him on the phone. When the government of Ontario ran an anti-tariff television ad, Mr. Trump threatened more tariffs. Now that the court has ruled the president cannot use tariffs so indiscriminately, Mr. Trump has imposed a new ten percent tariff under a different law. He says the rate will eventually go up to 15 percent, though he has not yet put pen to paper in order to make that a reality. The new law being used, the Trade Act of 1974, allows Mr. Trump to impose tariffs up to 15 percent if there are “balance of payments” issues, though the Democratic states suing to block the tariffs say Mr. Trump’s justification is at odds with the law itself. The attorneys general suing him say that he is taking America’s trade deficit and using that as a stand-in for a balance of payments issue. “The President’s Proclamation completely ignores the balance, so to speak, of the balance of payments: foreign capital and financial investment inflows into the United States, which are essential components of the definition of the ‘balance of payments,’ and are what balances a trade deficit in the balance of payments today,” the states write. A libertarian group involved in the first Supreme Court win, the Liberty and Justice Center, has signed on to this new lawsuit from blue states, agreeing that the president has again overstepped his authority. In a filing with the Court of International Trade, lawyers from the group said having a balance of payments issue in 2026 is “economically impossible for the United States to suffer under our current system of floating exchange rates.”“[U]ntil now, no president has ever used [the Trade Act] to impose balance-of-payments tariffs. That’s because the conditions it contemplates — a balance-of-payments deficit akin to that Nixon faced in the early 1970s — has not occurred since before [the Trade Act] was passed,” the group’s lawyers write in their brief. Even though the legal challenge to the new tariff rationale could be a precedent-setting one, there may not be a need for a full appellate process thanks to the Trade Act itself. Unlike during the last legal challenge to his tariffs, which eventually ended in his defeat, Mr. Trump will have to answer to Congress. For more than a year, Speaker Mike Johnson and House Republicans used a procedural trick to bar lawmakers from bringing resolutions to the floor to roll back Mr. Trump’s Liberation Day import taxes. Once a small number of House GOP members broke with Mr. Johnson, however, that moratorium on anti-tariff resolutions expired, allowing lawmakers to challenge Mr. Trump. Once that vote became available, six Republicans sided with nearly all Democrats to vote for a resolution killing the import taxes. Under the Trade Act, Mr. Trump can not only be challenged by Congress in his tariff authority, but he will need to get explicit consent from the legislative branch this summer if he wants to continue using the new tariffs. Mr. Trump must pass a measure through both the House and Senate within 150 days of imposing the tariffs in order for the import taxes to continue. Because he signed the proclamation for the ten percent tariff at the end of February, he will have to go to Congress by the end of July, at the very earliest. Senator Chuck Schumer, however, says it would be a losing effort. It would take 60 votes in the upper chamber. to pass anything approving Mr. Trump’s tariffs. In a statement after Mr. Trump levied the ten percent tax, Mr. Schumer said that Democrats “will block any attempt to extend these harmful tariffs when they expire this summer.”

Trump’s Pared-Back Tariffs Return to Trade Court Under New Legal Rationale

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