US Trade Court Rules Trump’s Tariffs Misguided, Issues Narrow Block for Two Importers

A US trade court has delivered a significant setback to President Donald Trump’s tariff strategy, ruling that his recent 10% temporary global duties are unjustified under a 1970s trade law. The US Court of International Trade’s 2-1 decision specifically blocks the levies for two private importers and the State of Washington, while leaving the tariffs in place for all other importers during the Trump administration’s appeal process. These tariffs are expected to expire in July.

The court determined that Trump’s imposition of tariffs under Section 122 of the Trade Act of 1974 was misguided. One judge noted that it was premature to grant victory to the plaintiffs. This ruling, while limited in scope, represents another major obstacle for Trump’s global tariff ambitions, coinciding with his upcoming discussions on trade tensions with Chinese President Xi Jinping in Beijing.

The ruling sets the stage for a protracted legal battle over billions of dollars in tariff refunds, following the US Supreme Court’s decision that struck down Trump’s sweeping global tariffs imposed under a national emergencies law just three months prior. Trump attributed the trade court’s decision to “two radical left judges,” expressing his frustration with the judicial system.

The Trump administration plans to revive broad tariffs on major trading partners by invoking Section 301 of the Trade Act of 1974, which addresses unfair trade practices. Three Section 301 tariff investigations are currently underway, with results expected by July.

Narrow Injunction Denied

The New York-based Court of International Trade declined to issue a universal injunction blocking the tariffs for all importers. This decision came after a request from a coalition of 24 states, primarily led by Democrats, was rejected on the grounds that those states lacked standing to seek such relief. The court 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 immediately respond to requests for comment. Legal experts anticipate that the ruling will be appealed, leading to further consideration by the US Court of Appeals for the Federal Circuit and potentially the Supreme Court. Dave Townsend, a partner in Dorsey & Whitney’s International Trade Group, indicated that other importers might seek broader remedies that apply to more companies.

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

Two small businesses, toy company Basic Fun! and spice importer Burlap & Barrel, argued that the new tariffs were an attempt to circumvent a landmark Supreme Court decision that invalidated Trump’s 2025 tariffs imposed under the International Emergency Economic Powers Act. Following the Supreme Court ruling, Trump turned to the Section 122 statute, which permits duties of up to 15% for up to 150 days to address serious “balance of payments deficits” or to prevent an imminent 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!, stated that the decision is a significant win for American companies that rely on global manufacturing to provide safe and affordable products. He emphasized that unlawful tariffs hinder businesses’ ability to compete and grow, expressing encouragement at the court’s recognition that the tariffs exceeded the President’s authority.

Jeffrey Schwab, representing the importers, noted that the application of the ruling solely to the plaintiffs raises questions about its broader implications. The Trump administration had claimed 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.

Several economists have questioned the rationale behind the new Section 122 tariffs from the outset. Gita Gopinath, former First Deputy Managing Director of the International Monetary Fund, remarked that it is widely accepted that the US is not facing a balance-of-payments crisis, which typically involves a significant increase 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 now with the King & Spalding law firm, stated that while the administration will appeal this decision, it will continue collecting most of the 10% tariffs under Section 122 until July 24. He noted that Section 122 refunds would not be possible until the appeals courts have rendered their decisions.

Schwab added that other companies could potentially file lawsuits seeking refunds, depending on whether the government appeals or allows the tariffs to expire on July 24 as scheduled.

As reported by www.emirates247.com.

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Published on 2026-05-08 11:50:00 • By FAME Delivered News Desk