A US federal trade court has struck down president Donald Trump’s latest 10% global tariff regime, ruling that the White House exceeded its authority under a 1974 trade law while imposing temporary import duties on goods entering the US.
In a 2-1 ruling, the US Court of International Trade held that the tariffs are 'invalid' and 'unauthorised by law', delivering another setback to president Trump’s aggressive trade agenda.
The tariffs had been imposed in February on imports from countries worldwide, including India, for a temporary period of 150 days after the US Supreme Court earlier struck down Trump’s previous sweeping tariff measures introduced under emergency powers legislation.
The latest duties were imposed under Section 122 of the Trade Act of 1974, which allows a US president to introduce temporary import surcharges of up to 15% to address balance-of-payments problems.
However, the trade court ruled that the Trump administration wrongly relied on broad trade deficits and current account deficits instead of the narrower 'balance-of-payments deficits' that Congress intended when it framed the law in 1974.
Judges Mark A Barnett and Claire R Kelly say president Trump’s proclamation 'fails to assert that those required conditions have been satisfied'.
“Rather than identifying ‘balance-of-payments deficits’ as that term was intended in 1974, the Proclamation relies upon current account deficits, and a discussion of a large and serious trade deficit,” the majority ruling says.
The judges further warned that accepting such an expansive interpretation of the law would effectively hand US presidents unlimited tariff powers.
“Such an expansive reading of the statute would raise a non-delegation issue, which in turn would prompt a constitutional question,” the ruling stated.
The court sided with importers Burlap and Barrel and toy company Basic Fun, along with the State of Washington, which had challenged the tariffs. However, it dismissed claims filed by several Democratic-led states, saying they lacked legal standing.
Judge Timothy Stanceu dissented, arguing that courts should not narrowly define economic indicators or second-guess the president’s economic judgment.
The ruling’s immediate impact remains limited because the New York-based court blocked the tariffs only for Washington state and the two private importers involved in the case. The court declined to issue a universal injunction that would have suspended the tariffs nationwide.
“Private plaintiffs make no specific arguments for a universal injunction. Costs to one plaintiff is not an appropriate basis for the imposition of a universal injunction,” the court observed.
The Trump administration is expected to appeal the decision before the US Court of Appeals for the Federal Circuit, with the matter likely to eventually return to the Supreme Court.
The latest verdict comes months after the Supreme Court ruled that president Trump could not use the International Emergency Economic Powers Act (IEEPA) to impose sweeping global tariffs.
Following that ruling, president Trump defended Section 122 as one of several 'very powerful alternatives' available to continue his tariff programme.
At the time, he had lashed out at the Supreme Court ruling and insisted the administration would continue pursuing tariffs.
“We are going forward. We will be able to take in more money,” Mr Trump had said.
Reacting to the latest trade court ruling, president Trump criticised the judges and accused them of political bias.
“So, nothing surprises me with the courts. Nothing surprises me,” Mr Trump told reporters in Washington. “We get one ruling, and we do it a different way.”
The legal battle has intensified scrutiny over president Trump’s use of executive authority on trade policy. Critics, including some Republicans, have argued that tariff powers constitutionally rest with Congress rather than the White House.
Senate Republican leader Mitch McConnell had earlier said using emergency powers 'to circumvent Congress in the imposition of tariffs' was illegal.
The earlier tariff regime struck down by the Supreme Court had collected an estimated US$166bn (billion) in duties and deposits, according to US Customs and Border Protection figures. Reports indicated that more than 330,000 importers could become eligible for refunds following the Supreme Court decision.
