- The U.S. Court of International Trade invalidated Trump’s 10% global tariffs imposed under Section 122 of the Trade Act, ruling 2-1 that the president failed to satisfy the statute’s legal criteria for imposing import surcharges.
- The court blocked enforcement against the two plaintiff companies (spice importer Burlap & Barrel and toy company Basic Fun) and Washington State, but stopped short of a universal injunction — meaning other importers don’t get automatic relief.
- The ruling is the second major tariff defeat: the Supreme Court struck down Trump’s first round of global tariffs in February under IEEPA, triggering $170 billion in refund claims that are still being processed.
- The administration plans to appeal and is already developing Section 301 tariffs as the next legal vehicle — but those require months of investigations and won’t be ready until July at the earliest, creating a gap in trade leverage heading into the Trump-Xi summit.
What Happened?
A 2-1 panel of the Court of International Trade ruled that Trump’s 10% global tariffs — imposed in February under Section 122 of the Trade Act of 1974, a law never previously invoked — were unlawful. The court found the administration failed to demonstrate the existence of “fundamental international payments problems” as required by the statute, instead relying on trade and current account deficits as proxies. The ruling grants injunctive relief only to the direct plaintiff importers and Washington State, not a nationwide block. Trump told reporters: “We had two radical left judges who voted against it. We always do it a different way.”
Why It Matters?
This is the second consecutive court invalidation of Trump’s signature tariff agenda — a serious blow to the administration’s economic and geopolitical leverage. The $8 billion per month in Section 122 tariff revenue had been serving as a bridge until new Section 301 tariffs could be implemented later this year. That bridge is now shaky. More politically damaging: the ruling comes just days before Trump’s May 14–15 summit with Xi Jinping in Beijing, where trade policy is a central agenda item. With courts repeatedly striking down unilateral tariff authority, Trump’s negotiating leverage is diminished.
What’s Next?
The Justice Department is expected to appeal to the Court of Appeals for the Federal Circuit — the same court that ruled against the administration in the IEEPA tariff fight. Meanwhile, the administration is pressing ahead with Section 301 investigations into forced labor practices and excess manufacturing capacity, which are expected to eventually result in new and more legally durable duties. Watch for whether the court ruling emboldens more importers to sue for relief, and whether Congress makes any move to clarify or expand presidential tariff authority. The IEEPA refund process — covering $170 billion already collected — is also continuing in parallel.
Source: The Wall Street Journal
