Explained: US court blocks Trump’s 10% global tariffs... but only for a select few

A US federal trade court has dealt another major setback to President Donald Trump’s tariff agenda, ruling that the administration’s temporary 10 per cent global tariffs were imposed beyond the powers granted to the president under American trade law.

The judgment, delivered by the United States Court of International Trade in New York on Thursday, marks the second major judicial defeat for Trump’s broad tariff strategy this year.

The three-judge panel ruled 2-1 that the administration improperly used Section 122 of the Trade Act of 1974 to justify the tariffs.

The levies, announced after the Supreme Court ruling in February, imposed a blanket 10 per cent duty on imports from countries across the world and were intended to remain in effect until July 24.

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The case also arrives just days before Trump is scheduled to travel to Beijing for trade-focused talks with Chinese President Xi Jinping.

How did Trump’s latest tariff strategy reach the courts?

This latest legal dispute traces back to the Trump administration’s aggressive attempt to rebuild its tariff programme after suffering a major Supreme Court defeat earlier this year.

In 2025, Trump had imposed sweeping tariffs on imports from nearly every country using the International Emergency Economic Powers Act (IEEPA), a law historically associated with national emergencies and sanctions.

The administration argued that America’s longstanding trade deficits constituted a national emergency severe enough to justify broad import taxes.

However, the Supreme Court ruled on February 28 that IEEPA did not grant the president the authority to impose such far-reaching tariffs. That decision forced the White House to quickly search for an alternative legal mechanism to continue its trade agenda.

The administration subsequently invoked Section 122 of the Trade Act of 1974, a provision that permits the president to temporarily impose tariffs of up to 15 per cent for a maximum of 150 days under certain economic conditions.

Trump then introduced a new 10 per cent global tariff structure that effectively replaced the emergency tariffs invalidated by the Supreme Court.

The White House argued that the United States was facing a severe trade imbalance requiring urgent intervention. Officials pointed to an annual goods trade deficit estimated at approximately $1.2 trillion as well as a current account deficit equivalent to around four per cent of US gross domestic product.

Under the administration’s interpretation, those figures justified temporary import restrictions aimed at protecting domestic manufacturing and correcting what Trump repeatedly described as unfair global trade relationships.

But the plaintiffs in the case argued that the administration was attempting to sidestep the Supreme Court ruling by stretching another law beyond its intended purpose.

Two private companies — spice importer Burlap & Barrel and toy manufacturer Basic Fun! — joined Washington state in challenging the tariffs before the Court of International Trade.

The companies argued that Section 122 was never intended to address ordinary trade deficits and that the administration had improperly transformed a narrow economic tool into a broad mechanism for global tariffs.

Why did the court reject the Trump administration’s argument?

The court’s majority concluded that the administration had misapplied Section 122 because the statute was designed for a different type of economic crisis than the one described by the White House.

According to the judges, the law permits temporary tariffs only when the United States faces serious balance-of-payments difficulties or an imminent threat to the value of the dollar. The court found that a large trade deficit, by itself, did not satisfy that threshold.

The majority stated that the tariffs were “invalid” and “unauthorised by law,” concluding that Trump had exceeded the powers delegated by US Congress.

The ruling highlighted the constitutional principle that tariff authority fundamentally rests with Congress, even though lawmakers may delegate limited trade powers to the executive branch under carefully defined circumstances.

One judge dissented from the ruling, arguing that the law grants the president broader flexibility in responding to economic conditions and that the court should not narrowly interpret the statute.

Still, the majority opinion represented a direct rejection of the administration’s legal reasoning.

Experts noted that the ruling raised broader questions about the administration’s repeated reliance on older statutes to pursue expansive tariff policies without new congressional approval.

Why does the ruling apply only to a few plaintiffs?

Despite the significance of the judgment, the court stopped short of issuing a nationwide injunction that would immediately halt tariff collection for all importers.

Instead, the ruling directly protects only the three plaintiffs involved in the case: Washington state, Burlap & Barrel, and Basic Fun!.

The court rejected requests from a coalition of 24 states — most of them led by Democratic governors or attorneys general — seeking broader relief. The judges ruled that most of those states lacked standing because they had not demonstrated that they directly paid the tariffs or faced immediate financial harm under the Section 122 regime.

Washington state was treated differently because it submitted evidence showing that the University of Washington had paid import duties affected by the tariffs.

The judges also declined to impose what they described as a “universal injunction,” stating that the plaintiffs had not demonstrated why relief for all importers was necessary.

“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. Accordingly, the court declines to enter a universal injunction,” the ruling stated.

As a result, the tariffs technically remain in effect for most importers while the administration decides whether to appeal.

That narrow scope has created uncertainty for businesses that continue paying the duties even though the court has declared the underlying tariff programme unlawful for the plaintiffs.

What did the businesses challenging the tariffs say?

Basic Fun!, a Florida-based toy company, argued that the tariffs had imposed substantial additional costs on importers already facing difficult international market conditions.

Jay Foreman, the company’s CEO, said his firm alone had paid more than $100,000 under the tariff regime struck down by the court. “We fought back today and we won, and we’re extremely excited,” Foreman told reporters after the ruling.

He also criticised the administration’s trade strategy, arguing that Trump had approached tariff policy “with a bazooka instead of a fine tooth comb.”

In a separate statement issued after the ruling, Foreman said, “This decision is an important win for American companies that rely on global manufacturing to deliver safe and affordable products. 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," he added.

Trade lawyers said the ruling may encourage many other importers to pursue similar lawsuits or demand refunds for duties already paid.

However, legal experts cautioned that refunds may not arrive quickly because the administration is expected to appeal the ruling.

The government has only recently begun processing repayments connected to the earlier tariffs invalidated by the Supreme Court under IEEPA. Questions also remain about whether refunds can be issued before appeals courts complete their review of the case.

How did Trump respond to the judgment?

Trump criticised the judges and signalling that his administration would continue searching for alternative legal routes to preserve broad tariff powers.

Speaking to reporters in Washington after visiting a reflecting pool renovation project, Trump blamed “two radical left judges” for the ruling.

“So, nothing surprises me with the courts. Nothing surprises me,” Trump said. “We get one ruling and we do it a different way,” he added.

Still, administration officials have repeatedly indicated that the White House views the Section 122 tariffs as only a temporary bridge toward more durable trade restrictions imposed through other statutes.

What legal options does the Trump administration still have?

Even before Thursday’s decision, the administration had already begun preparing a new tariff framework using other sections of US trade law considered more resilient against court challenges.

The White House is increasingly relying on Sections 301 and 232 of the Trade Act, which provide broader authority for tariffs tied to unfair trade practices or national security concerns.

Unlike the emergency tariffs previously struck down, those statutes require formal investigations before tariffs can be imposed.

The administration currently has multiple Section 301 investigations underway, many of which are expected to conclude by July.

One major probe launched by the Office of the United States Trade Representative is examining whether 16 major trading partners are engaging in chronic overproduction that harms American industry.

The countries and blocs under scrutiny include China, the European Union and Japan.

Administration officials argue that excess manufacturing capacity in those economies depresses global prices and disadvantages US producers.

At the same time, another investigation is reviewing whether approximately 60 economies are doing enough to prevent imports tied to forced labour. According to administration officials, those economies collectively account for roughly 99 per cent of US imports.

This week, the Office of the United States Trade Representative conducted public hearings connected to the overcapacity investigation.

The administration is expected to use the findings from those probes to justify another round of tariffs later this summer.

Trump’s advisers appear confident that tariffs imposed through Section 301 would be more likely to survive legal scrutiny because the statute has historically been upheld by courts.

The administration’s focus on Section 301 also reflects the president’s longstanding emphasis on China and industrial competition.

China has remained one of the central targets of Trump’s trade policies since his first term in office, when Washington and Beijing engaged in a prolonged tariff war that reshaped global supply chains and international commerce.

With inputs from agencies