Just two months after the Supreme Court declared the Trump Administration’s tariffs unconstitutional, the president’s backup plan — tariffs under a different statute — will face its own legal challenge in a Manhattan court. 

A three-judge panel in the Court of International Trade will hear arguments on Friday in a pair of cases challenging the legality of the president’s workaround — Section 122 tariffs — put into place after his loss in the country’s top court. 

Section 122 authorizes the president to impose temporary import tariffs or other trade restrictions for a period of 150 days without congressional approval. These tariffs or trade restrictions must address “situations of fundamental international payments problems.” The statute also requires the tariffs be uniform across countries and categories of goods.

A coalition of 24 states sued to block the Trump administration’s use of Section 122 tariffs just days after the Supreme Court struck down the International Emergency Economic Powers Act (IEEPA) tariffs. 

“I have the right to do tariffs, and I’ve always had the right to do tariffs,” the president said just hours after the Supreme Court decision.

In the second case before the same court on Friday, two small businesses, a spice importer and a toy manufacturer, will be represented by the Liberty Justice Center, which partnered with other small businesses to successfully block the IEEPA tariffs. 

This new legal challenge comes after the Supreme Court invalidated most of Trump’s sweeping “Liberation Day” tariffs. In a 6-3 ruling on February 20, the justices declared the president did not have the authority to impose tariffs under IEEPA. 

Immediately after that ruling, the president introduced a new wave of global tariffs using Section 122 of the Trade Act of 1974. Initially he set those tariffs at a blanket rate of 10%. Just one day later, he signaled he would raise them to 15%, but he has not done that yet. 

The use of Section 122 by a president to implement tariffs is unprecedented. 

“The President’s attempt to use Section 122 to impose his desired tariffs is as lawless as his prior use of IEEPA,” the plaintiff states write in their suit, “Until last month it was IEEPA, now it is Section 122, but the policy is the same — an exercise of completely unrestrained executive power in an attempt to usurp the taxing power that the Constitution vests in Congress, not the President.”

The plaintiffs argue the statute only allows a president to bring tariffs under Section 122 to address a “balance of payments” issue, like a sudden global currency crisis. That economic situation is different than the trade deficit Trump is trying to target. 

The plaintiffs also raise a separation of powers argument again, claiming Congress did not authorize the president to invoke tariffs under these conditions.

The Trump administration argues the president has full authority to implement tariffs under Section 122. 

“For over a century, Congress has supplemented the President’s constitutional power over foreign affairs and national security by delegating him the authority to manage foreign trade in response to international conditions, including by imposing tariffs,” the government wrote in a brief. 

But the administration has also previously undercut its own argument. In an appellate court filing related to the IEEPA case that made it to the Supreme Court, the Department of Justice had argued Section 122 would not be a viable solution to the president’s perceived trade emergency. 

The DOJ ultimately dropped this line of argument when the case reached the Supreme Court, but critics of the new tariffs have highlighted it to undermine the legality of the new tariffs. 

At this point, the Supreme Court has only weighed the legality of the IEEPA tariffs. While the dissenting justices in the IEEPA case indicated the president could use Section 122 for tariffs, the Court’s majority explicitly declined to address the legality of other types of tariffs. “We do not speculate on hypothetical cases before us,” Chief Justice John Roberts noted in the opinion. 

But a case the justices saw as hypothetical could once again come before them as this new  challenge works its way through the courts.

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