Trump’s Replacement Tariffs Face Legal Challenges Following Supreme Court Defeat

Democratic attorneys general and business groups ask a federal court to strike down Trump’s 10% replacement tariffs, citing lack of legal authority under Section 122.

By: AXL Media

Published: Mar 15, 2026, 3:48 PM EDT

Source: Information for this report was sourced from Politico

A New Legal Battleground Over Trade Authority

The conflict over U.S. trade policy has entered a second phase as Democratic leaders and business advocacy groups target President Trump’s backup tariff plan. After the Supreme Court struck down the initial "Liberation Day" taxes, the administration pivoted to Section 122 of the Trade Act of 1974 to impose a 10% duty on most trading partners. Plaintiffs, led by New York Attorney General Letitia James, contend that the President is misapplying the law to address a standard trade deficit rather than the specific currency and international accounting issues the statute was designed to mitigate.

Defining the Balance of Payments Predicate

The core of the legal dispute rests on the interpretation of "balance of payments," a term used repeatedly in Section 122 but never explicitly defined. Attorneys representing 24 states argue that this is a technical financial term that does not encompass a simple trade imbalance. Conversely, some trade experts suggest that the lack of a definition may grant the executive branch significant deference. The Court of International Trade will now have to determine how much authority a president has to define economic "emergencies" that serve as the foundation for unilateral tax increases.

Inconsistencies in Executive Justification

Legal analysts have pointed to a potential vulnerability in the administration’s defense: previous statements made by Justice Department lawyers. During the litigation over the original tariffs, government attorneys argued that Section 122 was not a viable tool for addressing trade deficits, labeling the two concepts as "conceptually distinct." Challengers are now using these prior admissions to argue that the White House is attempting a legal "fast one" by switching justifications after their primary authority was invalidated by the high court.