The United States courts will reexamine Trump's 10% global tariff, facing a legality test.

The US Trade Court is conducting a judicial review of the Trump administration's latest round of tariff policies, with the core dispute focusing on a fundamental question: can trade deficits serve as a legal basis for imposing tariffs? According to Xinhua News Agency, in February of this year, the Supreme Court overturned the tariffs imposed by Trump in 2025 under the International Emergency Economic Powers Act (IEEPA) with a 6-3 ruling. The government then invoked Section 122 of the 1974 Trade Act, announcing the imposition of a new round of 10% tariffs within hours of the Supreme Court ruling. According to Reuters and The New York Times, on Friday (April 10), a panel of three judges from the US International Trade Court conducted a three-hour hearing on Trump's 10% comprehensive import tariff order signed in February. The judges sharply questioned the legal basis cited by the government, implying that a trade deficit is not the same as the "balance of international payments" specified in the law, and that the government's legal arguments have significant loopholes. This lawsuit was brought by 24 states primarily controlled by the Democratic Party and several small businesses. If the government loses, not only will these tariffs be invalidated, but the federal government may also be forced to refund the taxes already collected. This lawsuit is the latest legal challenge to Trump's tariff policies. Trade lawyer Timothy C. Brightbill stated before the hearing that the court is expected to have a "skeptical attitude" towards Trump's broad authority to impose tariffs. Legal doubts: Trade deficits balance of international payments The core legal dispute of this lawsuit is whether Section 122 of the 1974 Trade Act cited by Trump is applicable in the current situation. This provision allows the president to impose tariffs of up to 15% on imported goods for a period not exceeding 150 days, but strictly limited to addressing "large and serious US balance of payments deficits" and "fundamental international payment problems." In his executive order in February, Trump mainly cited the US trade deficit as a reason, stating that it could "endanger the United States' ability to finance expenditure, erode investor confidence, and disrupt financial markets." However, the plaintiffs - including the government of Oregon and small businesses - specifically pointed out that a trade deficit is not the same as the "balance of international payments" and is fundamentally impossible in the economic environment of 2026. Senior judge appointed by President George W. Bush, Timothy Stanceu, directly pointed out this contradiction in the hearing: "We are not sure how to apply the concept of 1974 to 2026, but we do know that 'trade deficit' and 'balance of payments deficit' are not the same thing." The Department of Justice lawyer, Brett A. Shumate, insisted that the US trade deficit is a more extensive component of the "balance of international payments" and constitutes a "large and serious" international payment problem, and that this judgment falls within the president's "discretionary power" and is not subject to court review. However, this argument was almost immediately met with repeated questioning by the judges. Can laws from the gold standard era be applied today? The plaintiffs further pointed out that the economic risks targeted by Section 122 are rooted in a long-gone historical context - the Bretton Woods system of the 1960s and 1970s when the US dollar was pegged to gold. At that time, foreign holders could exchange dollars for gold reserves stored in Fort Knox, Kentucky, and the dollar faced the real risk of widespread gold redemption. Oregon lawyer Brian Marshall pointed out that the US terminated the international convertibility of the dollar to gold in 1971, and today foreign holders do not have the possibility of triggering a "run on gold." The economic risk scenario presumed by Section 122 no longer exists. He argued that the judges should interpret the president's powers based on the understanding at the time of legislation in the 1970s. Jeffrey Schwab, legal director of the Liberty Justice Center representing small businesses, also emphasized that Congress was "to address a very specific problem" at the time, namely the specific risks brought by the gold standard, and Trump's interpretation is "very, very broad." Stan Veuger, senior researcher at the American Enterprise Institute, along with dozens of experts, submitted a friend of the court brief supporting the plaintiffs to the trade court. He stated that the Trump administration's strategy is to "obtain the broadest legal tools possible." Uncertainty in the timing of the ruling, new tariff system is already in progress The outcome of this case is significant. According to The New York Times, the Supreme Court's overturning of the IEEPA tariffs in February has sparked a wave of businesses seeking refunds of the approximately $166 billion in illegal tariffs collected by the government. If the 10% tariffs in this case are also deemed illegal, the government will face new pressure to refund taxes. The plaintiffs also expressed caution about Trump's potential strategy to evade legal restrictions. Marshall warned that if the government continues to invoke different legal provisions consecutively to keep the tariffs in place, it will create a de facto permanent tariff mechanism - "If we face a series of continuous tariffs, and tariffs are always in place, that will be a problem." White House spokesperson Kush Desai stated in a declaration that the president is "exercising executive authority granted by the Constitution in a lawful manner," and the government will "vigorously defend the legality of the president's actions." The panel did not reveal a timetable for the ruling at the end of the hearing. Trade lawyer Brightbill expects that the legal process may take months to reach a complete ruling, by which time the Trump administration will have moved forward with alternative tariff schemes. According to The New York Times, Trump initially saw these comprehensive tariffs as a temporary measure to buy time, allowing the government to launch investigations into trade practices of various countries under Section 301 of the same 1974 Trade Act, and subsequently impose more targeted tariffs. Veuger pointed out that it is "more difficult to implement tariffs on such a large scale and quickly under Section 301" and that the government invoking these provisions has a "long track record" and is relatively less susceptible to legal challenges. This article was originally published on the "Wall Street View" app, written by Dong Jing, GMTEight editor: Song Zhiying.