The United States trade court has ruled against President Donald Trump’s latest 10 percent global tariffs, imposed after a loss at the Supreme Court.

The ruling, which finds that across-the-board tariffs were not justified under a 1970s trade law, marked another legal setback for the Trump administration, which has attempted to shield the U.S. economy behind a wall of import taxes.

The issue concerns temporary 10% worldwide tariffs the Trump administration imposed after the Supreme Court in February struck down even broader double-digit tariffs the president had imposed last year on almost every country on Earth. The new tariffs, invoked under Section 122 of the Trade Act of 1974, were set to expire July 24.

The US Court of International Trade ruled in favour of small businesses that challenged the tariffs, which took effect on February 24. The ruling was 2-1, with one judge saying that it was premature to grant victory to the small business plaintiffs.

The court’s decision directly blocked the collection of tariffs from three plaintiffs: the state of Washington and two businesses, spice company Burlap & Barrel and toy company Basic Fun! Jeffrey Schwab, Director of litigation at the libertarian Liberty Justice Center, which represented the two companies said “it’s not clear’’ whether other businesses would have to continue to pay the tariffs.

The split three-judge panel of the Court of International Trade in New York found the 10% global tariffs were illegal after the small businesses sued. The court ruled 2-1 that Trump overstepped the tariff power that Congress had allowed the president under the law. The majority wrote that the tariffs are “invalid″ and “unauthorized by law.” The third judge on the panel found the law allows the President more leeway on tariffs.

The small businesses had argued the new tariffs were an attempt to sidestep a landmark US Supreme Court decision that struck down the Republican president’s 2025 tariffs imposed under the International Emergency Economic Powers Act.

Last year, Trump invoked the 1977 International Emergency Economic Powers Act (IEEPA) to declare the nation’s longstanding trade deficit a national emergency, justifying sweeping global tariffs. The Supreme Court ruled in February that IEEPA did not authorize the tariffs. The U.S. Constitution gives Congress the power to establish taxes, including tariffs, though lawmakers can delegate tariff power to the President.

In his February order, Trump invoked Section 122 of the Trade Act of 1974, which allows for duties for up to 150 days to correct serious “balance of payments deficits” or head off an imminent depreciation of the dollar. Thursday’s court ruling found the law was not an appropriate step for the kinds of trade deficits that Trump cited in his February order.

The Trump administration had argued that a serious balance-of-payments deficit existed in the form of a $1.2 trillion annual US goods trade deficit and a current account deficit of 4 percent of gross domestic product (GDP). However, some economists and trade lawyers argue the US is not on the cusp of a balance-of-payments crisis, making the new duties vulnerable to a legal challenge.

Meanwhile, the administration is conducting two investigations that could end in more tariffs. The Office of the U.S. Trade Representative is looking into whether 16 U.S. trading partners, including China, the European Union and Japan, are overproducing goods, driving down prices and putting U.S. manufacturers at a disadvantage.

It is also investigating whether 60 economies from Nigeria to Norway and accounting for 99% of U.S. imports do enough to prohibit the trade in products created by forced labor.

Court Decision On Tariffs Hailed

Jay Foreman, CEO of toymaker Basic Fun! hailed the court’s decision, calling it an “important win for American companies that rely on global manufacturing to deliver safe and affordable products.” He added, “Unlawful tariffs make it harder for businesses like ours to compete and grow.”

“We are encouraged by the court’s recognition that these tariffs exceeded the President’s authority. This ruling brings needed clarity and stability for companies navigating global supply chains.”
Jay Foreman

Dave Townsend, a trade lawyer at Dorsey & Whitney, said that the ruling will open the door for more companies to request that the tariffs be thrown out and that any payments they’ve made be refunded. “Other importers likely will now ask for a broader remedy that applies to more companies,” Townsend said, though he cautioned the case could also reach the Supreme Court.

If the Trump administration appeals the court’s decision, as expected, it would first turn to the U.S. Court of Appeals for the Federal Circuit, based in Washington, and then, potentially, the Supreme Court.