US Trade Court Rules Trump’s 10% Tariffs Misguided, Issues Limited Block for Two Importers

A recent ruling by the US Court of International Trade has dealt a significant blow to President Donald Trump’s tariff strategy. The court determined that the imposition of a 10% temporary global tariff under Section 122 of the Trade Act of 1974 was unjustified. However, the ruling only blocks the tariffs for two private importers and the State of Washington, leaving the duties in place for all other importers as the Trump administration prepares to appeal.

The court’s decision, rendered with a 2-1 vote, indicates that the temporary tariffs are expected to expire in July. The ruling highlights the court’s view that Trump’s application of Section 122 was misguided, with one judge noting it was premature to grant a complete victory to the plaintiffs.

This ruling comes just ahead of a scheduled meeting between Trump and Chinese President Xi Jinping in Beijing to discuss ongoing trade tensions. It sets the stage for a potential legal battle over billions of dollars in tariff refunds, following a recent US Supreme Court decision that invalidated Trump’s broader global tariffs imposed under a national emergencies law.

Trump criticized the ruling, attributing it to “two radical left judges.” He expressed his lack of surprise at the court’s decision, stating, “We get one ruling and we do it a different way.”

Despite the setback, the Trump administration plans to pursue broader tariffs on major trading partners by invoking Section 301 of the Trade Act of 1974, which addresses unfair trade practices. Three investigations under Section 301 are currently underway, with completion expected in July.

Narrow Injunction Denied

The New York-based Court of International Trade declined to issue a universal injunction that would block the tariffs for all importers. This decision followed a request from a coalition of 24 states, primarily led by Democrats, which the court deemed lacked standing to seek such relief. The ruling stated, “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 White House and the US Trade Representative’s office did not respond immediately to requests for comment. Legal experts anticipate that the ruling will be appealed, paving the way for further examination by the US Court of Appeals for the Federal Circuit and potentially the Supreme Court.

The court found that most of the states involved in the lawsuit, with the exception of Washington, were not importers who had incurred or could have incurred the Section 122 tariffs. Washington provided evidence of tariff payments made through the University of Washington, a public research institution.

Two small businesses, toy manufacturer Basic Fun! and spice importer Burlap & Barrel, argued that the new tariffs were an attempt to circumvent a landmark Supreme Court ruling that invalidated Trump’s 2025 tariffs imposed under the International Emergency Economic Powers Act. Following the Supreme Court’s decision, Trump turned to Section 122, which permits duties of up to 15% for a maximum of 150 days to address serious “balance of payments deficits” or avert a potential depreciation of the dollar.

Court’s Findings on Deficits

The court’s ruling on Thursday concluded that the law was not an appropriate measure for the types of trade deficits cited by Trump in his February order. Jay Foreman, CEO of Basic Fun!, described the decision as a significant victory for American companies reliant on global manufacturing. He stated, “Unlawful tariffs make it harder for businesses like ours to compete and grow,” and expressed encouragement over the court’s recognition that the tariffs exceeded the President’s authority.

Jeffrey Schwab, legal counsel for the importers, noted that the ruling’s application solely to the plaintiffs raises questions about its broader implications. The Trump administration had argued that a serious balance-of-payments deficit existed, citing a $1.2 trillion annual US goods trade deficit and a current account deficit of 4% of GDP.

Economists have expressed skepticism regarding the justification for the new Section 122 tariffs. Former International Monetary Fund First Deputy Managing Director Gita Gopinath remarked, “We can all agree that the US is not facing a balance-of-payments crisis,” which typically involves a significant rise in international borrowing costs and loss of access to financial markets.

A former trade official indicated that the administration is likely to challenge the ruling and may impose permanent tariffs under a different authority later this year. Ryan Majerus, a former senior US Commerce official, stated, “The administration will appeal this decision but will continue collecting most of the 10% tariffs under Section 122 until July 24, at which point we will likely have permanent Section 301 tariffs in place.” He added that refunds for Section 122 tariffs would not be possible until the appeals process concludes.

Schwab noted that other companies might pursue lawsuits for refunds, contingent on whether the government opts to appeal or allows the tariffs to expire as scheduled on July 24.

Source: www.emirates247.com

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Published on 2026-05-08 11:50:00 • By the Editorial Desk