5 takeaways from trade court battle over Trump’s new tariffs 

Marathon arguments over President Trump’s 10 percent global tariff left judges toiling over the meaning of a 1974 trade law on Friday. 

The U.S. Court of International Trade in New York heard arguments in a challenge by small businesses and blue states to Trump’s new tariffs, which he imposed after the Supreme Court declared his previous ones illegal based on his use of emergency powers to impose the global duties.

Here are five takeaways from the argument.

Judges struggle to interpret 1974 trade law

The judges repeatedly expressed difficulties in trying to parse the language of Section 122 of the Trade Act of 1974, the statute Trump now points to for his 10 percent global tariff.

Section 122 authorizes the president to temporarily surcharge imports up to 15 percent “to deal with large and serious United States balance-of-payments deficits” whenever there are “fundamental international payment problems.” 

It left the judges grappling with how Congress would’ve understood the terms in 1974.

“What is it and where is it defined?” Judge Claire Kelly pressed.

“We’re three judges who are trying to, please help us, we’re trying to figure it out,” Judge Timothy Stanceu said. “It’s a term in a statute, and we’re trying to define it.” 

By the end, even some of the lawyers acknowledged a lack of clarity. 

“We’ve discussed for three hours, and nobody seems to come to a consensus on what it means,” acknowledged Jeffrey Schwab, who represents two small businesses suing Trump.  

The president focused on the U.S. trade deficit.

In making his calculations to conclude there is a balance-of-payments deficit, Trump contended it’s sufficient to look only at what’s called the “current account,” which includes the trade deficit and things like international investment income and personal remittances. 

“The president invokes Section 122 to address large and serious trade deficits,” Assistant Attorney General Brett Shumate began his argument Friday. 

The challengers — two small businesses and two dozen Democratic-led states — said that interpretation is too narrow because it leaves out other accounts that should be part of the calculations. 

They said Congress in 1974 was really aimed at solving a currency crisis in a fixed exchange rate system. Now that the U.S. has moved off the gold standard and to a floating exchange rate, the challengers asserted a balance-of-payments crisis is impossible. 

One judge vocally presses challengers

Stanceu, the lone Republican-appointed judge on the three-judge panel, was the most vocal among the three.   

He filled up much of the time digging into the legislative history, grilling the challengers’ lawyers that Congress was focused on protecting currency reserves back in 1974. 

“That is not what they said,” the judge pushed back at one point. “There’s no mention of that in the Senate or House reports’ discussion of this.” 

Stanceu repeatedly suggested Congress was actually concerned about liquidity.

He noted Trump’s concerns about the rising trade deficit in recent years.

The judge asked “why that could not in the mind of someone looking at this in 1974, why that wouldn’t necessarily qualify as a fundamental international payment problem.” 

After the argument, Schwab, the small businesses’ lawyer, called it one of the most engaged panels he’s seen. But he said Stanceu is normally an active questioner and wouldn’t predict how the judge will ultimately rule. 

“I think, from my understanding, that is a trait of that of Judge Stanceu,” Schwab told The Hill. “He’s engaged and asks a lot of questions, and he certainly did so today. He was extremely interested in the legislative history.” 

Schwab is senior counsel at the Liberty Justice Center, a libertarian firm that challenged Trump’s previous tariffs and is hoping for a repeat.

Government also takes heat

Still, the government took heat during the argument.

Chief Judge Mark Barnett raised alarm about letting the president unilaterally pick “sub-accounts” and leave off others to make his calculations. 

“There doesn’t seem to be much there there in terms of Congress putting guardrails on his authority,” he said. 

Kelly also expressed concerns at turns. She cast doubt that someone can calculate the balance of payments deficit in different ways, as the government suggested is possible. 

“I didn’t get that sense that there was this array of ways that you could calculate,” Kelly said. 

Even Stanceu piled on at one point.

“I strongly agree with — that you may be trying to prove too much here,” he said after Barnett suggested the government had taken its argument too far. 

Stanceu is an appointee of former President George W. Bush. Barnett and Kelly were both appointed by former President Obama. 

It’s the trio’s first major confrontation with Trump’s second-term tariffs. It’s a different panel than the one that struck down the president’s previous sweeping tariffs, which involved a different law. 

Judges see differences from last tariff battle

Trump turned to Section 122 hours after the Supreme Court ruled that he could not impose tariffs under another 1970s-era statute. 

In a 6-3 blockbuster decision, the justices in February ruled that law, the International Emergency Economic Powers Act (IEEPA), doesn’t authorize any tariffs. 

“This case has nothing like that,” Stanceu said. “This case has a statute that expressly allows the imposition of tariffs or quotas. So we’re in a whole different universe now.” 

The question now becomes whether Section 122’s balance-of-payments requirements are met and how much authority the courts have to intervene. 

Trump has repeatedly insisted the Supreme Court’s decision confirms his authority to use the statute. 

“As the court pointed out, I have the absolute right to charge TARIFFS in another form, and have already started to do so,” Trump wrote on Truth Social earlier this year. 

The three dissenting justices noted Trump may be able to use Section 122, but the majority opinion did not directly greenlight them.  

“His authority doesn’t, doesn’t, you know, rise or fall on the success of the IEEPA tariffs,” Kelly told the government at one point Friday. 

Concerns about Oregon’s ability to sue

Even if the president’s new levies are illegal, all three judges questioned some of the states’ ability to challenge them. 

A plaintiff must have legal standing to sue. In federal court, that includes showing they have a concrete injury that the court can remedy.  

For businesses, the argument is simpler: They paid tariffs, and they want refunds. But unlike the businesses suing, many of the states aren’t directly paying the tariffs.

“University of Washington, they can get their money back. Explain that to me for Oregon,” Barnett asked Oregon’s lawyer. “I mean, you’re not going to get your money back. I mean, you’re a purchaser.”

“Everyone will have standing for everything, no?” Kelly said.  “So every anti-dumping case we have here, everyone’s going to have standing because they pay the price of those dumping duties?”

Brian Marshall, who works in the Oregon attorney general’s office and represented the states on Friday, said they would.

“I don’t think it’s likely that they’re going to exercise that right to be in court. But it’s the Article III limit,” Marshall said.

Stanceu similarly said, “I’m not sure that I see the same degree of clarity with regard to the state plaintiffs, other than we buy stuff.”