US Trade Court Rules Trump Tariffs Unlawful, Limits Relief to Two Importers

A US trade court dealt another setback to President Donald Trump’s tariff strategy, ruling that his latest temporary 10 per cent global duties were unjustified under a 1970s trade law. However, the court limited its order to two private importers and the state of Washington.

The 2-1 ruling by the US Court of International Trade leaves the temporary tariffs in place for all other importers while any appeal by the Trump administration proceeds. The duties are expected to expire in July.

The court found that Trump’s decision to impose the tariffs under Section 122 of the Trade Act of 1974 was misguided, although one judge said it was premature to hand victory entirely to the plaintiffs.

While the ruling concerns a set of levies due to expire in about two months, it marks another major obstacle to Trump’s global tariff ambitions. It also comes a week before he is expected to discuss trade tensions with Chinese President Xi Jinping in Beijing.

The decision sets the stage for another prolonged legal battle over billions of dollars in potential tariff refunds, three months after the US Supreme Court struck down Trump’s sweeping global tariffs imposed under a national emergencies law.

Trump blamed the ruling on “two radical left judges”.

“So, nothing surprises me with the courts. Nothing surprises me,” he told reporters after viewing a reflecting pool renovation project in Washington. “We get one ruling and we do it a different way.”

The Trump administration still plans to revive broad tariffs on major trading partners by invoking a third law that has survived multiple legal challenges — Section 301 of the Trade Act of 1974, which deals with unfair trade practices. Three Section 301 tariff investigations are currently underway and are due for completion in July.

Narrow Injunction

The New York-based Court of International Trade declined to issue an injunction blocking the tariffs for all importers, rejecting a request from a group of 24 states, most led by Democrats, on the grounds that those states lacked standing to seek such relief.

“Private plaintiffs make no specific arguments for a universal injunction. Costs to one plaintiff are not an appropriate basis for the imposition of a universal injunction. Accordingly, the court declines to enter a universal injunction,” the ruling stated.

The White House and the Office of the US Trade Representative did not immediately respond to requests for comment.

“The opinion undoubtedly will be appealed by the United States and thus sets the stage for further consideration by the US Court of Appeals for the Federal Circuit and the Supreme Court,” said Dave Townsend, a partner in Dorsey & Whitney’s international trade group. He added that other importers would likely seek a broader remedy covering more companies.

The court ruled that most of the states involved in the lawsuit, apart from Washington, were not importers that had paid or could have paid the Section 122 tariffs. Washington submitted evidence showing that tariffs had been paid through the University of Washington, a public research institution.

The two small businesses involved in the case — toy company Basic Fun! and spice importer Burlap & Barrel — argued that the new tariffs were an attempt to sidestep a landmark US Supreme Court ruling that struck down Trump’s 2025 tariffs imposed under the International Emergency Economic Powers Act.

Immediately after that ruling, Trump turned to Section 122, which permits duties of up to 15 per cent for a maximum of 150 days to address serious balance-of-payments deficits or prevent an imminent depreciation of the dollar.

Court Rejects Deficit Argument

Thursday’s ruling found that the law was not intended to address the type of trade deficits cited in Trump’s February order.

“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,” said Jay Foreman.

“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.

Jeffrey Schwab, who represented the importers, said limiting the ruling to the plaintiffs “of course brings up a lot of questions about how this will play out”.

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 amounting to 4 per cent of GDP.

Several economists questioned that justification from the outset, including former International Monetary Fund First Deputy Managing Director Gita Gopinath, who told Reuters that the US was not facing a balance-of-payments crisis.

A former trade official said the administration would likely challenge the ruling and later impose permanent tariffs under a different authority.

“The administration will appeal this decision but it will continue collecting most of the 10 per cent tariffs under Section 122 until July 24, at which point we will likely have permanent Section 301 tariffs in place,” said Ryan Majerus, now with the King & Spalding law firm.

Schwab said other companies could also file lawsuits seeking refunds, although that may depend on whether the government appeals or allows the tariffs to expire on July 24 as scheduled.