Federal court rules Trump’s global tariffs illegal after Supreme Court setback

A federal trade court has ruled against President Donald Trump’s latest 10% global tariffs, delivering another legal setback to a key pillar of his economic agenda. The decision by the U.S. Court of International Trade found that Trump exceeded the authority granted under a 1970s trade law when imposing the broad tariffs earlier this year.

The ruling comes months after the U.S. Supreme Court struck down a separate Trump tariff program that relied on emergency powers under the International Emergency Economic Powers Act. Together, the cases represent mounting judicial resistance to the administration’s aggressive trade strategy.

Court rejects Trump’s use of the 1974 Trade Act

The U.S. Court of International Trade ruled 2-1 that Trump’s February tariff order was not justified under Section 122 of the Trade Act of 1974. The law allows presidents to impose temporary tariffs of up to 150 days to address serious balance-of-payments deficits or prevent an imminent depreciation of the U.S. dollar.

Judges found that Trump’s order failed to establish that those conditions existed. The court concluded the administration had not shown evidence of the type of economic emergency envisioned under the statute.

Tariffs were imposed after Supreme Court setback

Trump announced the 10% global tariff plan on the same day the Supreme Court invalidated another major tariff initiative. That earlier program had relied on the 1977 International Emergency Economic Powers Act to justify sweeping import duties.

The Supreme Court ruled that Trump’s use of emergency powers to enact broad tariffs was unconstitutional, significantly limiting the administration’s ability to use executive authority to reshape trade relationships.

Trump’s February tariff order applied broadly to imports entering the United States, but several categories were exempted.

Excluded products included beef, tomatoes, oranges, pharmaceuticals, passenger vehicles, and some critical minerals. Goods covered under the U.S.-Mexico-Canada trade agreement also were not subject to the additional 10% levy.

Those exemptions reflected attempts by the administration to shield certain industries and strategic supply chains from higher import costs while still applying pressure on foreign trade partners.

Businesses argued tariffs exceeded presidential authority

Small businesses challenged the new tariffs in court, arguing the administration was attempting to sidestep the Supreme Court’s earlier ruling by turning to a different statute.

Among the plaintiffs were Florida-based toy company Basic Fun! and New York spice importer Burlap & Barrel. The businesses argued the tariffs created financial uncertainty and disrupted global supply chains that many American companies rely upon.

Although 24 states joined the legal challenge, the court ruled that most of the states lacked legal standing to sue. As a result, the decision only blocked enforcement of the tariffs for Basic Fun!, Burlap & Barrel, and Washington state.

The limited scope of the ruling leaves open the possibility that tariffs could remain in effect for other importers unless additional legal action succeeds.

The court’s decision was not unanimous. One judge dissented, arguing it was premature to grant victory to the business plaintiffs at this stage of the litigation.

The split decision highlights continuing disagreement over how broadly presidential trade powers can be interpreted during periods of economic stress.

Trump administration defended tariffs using trade deficit data

The Trump administration argued that the U.S. faced a serious balance-of-payments problem because of a $1.2 trillion annual goods trade deficit and a current account deficit equal to roughly 4% of GDP.

Administration officials claimed the tariffs were necessary to stabilize America’s economic position and strengthen domestic manufacturing competitiveness.

However, economists and trade lawyers questioned whether the nation faced the type of immediate financial crisis required under the Trade Act.

Critics of the tariffs argued the United States was not on the verge of a balance-of-payments emergency or a rapid collapse of the dollar.

Trade experts said the administration’s interpretation of the law stretched far beyond how Section 122 historically has been used. That legal vulnerability became a central issue in the court’s ruling.

The judges ultimately determined the administration had not sufficiently demonstrated the statutory requirements needed to justify the tariffs.

Basic Fun! calls ruling a win for manufacturers

Basic Fun! CEO Jay Foreman welcomed the court’s decision and said it would provide needed certainty for businesses operating in global markets.

“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,” Foreman said in a statement.

“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 said.

Trump signals he may pursue alternative tariff strategies

Trump suggested the administration would continue pursuing tariffs despite the legal defeat.

“Nothing surprises me with the courts. Nothing surprises me,” Trump said May 7 when asked about the court decision. “So we always do it a different way. We get one ruling and we do it a different way.”

The remarks indicate the administration may seek alternative legal pathways to continue imposing trade barriers.

Tariffs have become one of the defining features of Trump’s second-term economic platform. The president has repeatedly argued that import duties are necessary to secure better trade deals, protect U.S. industries, and reduce dependence on foreign manufacturing.

Trump has also used tariffs as leverage in broader geopolitical and economic negotiations with major trading partners.

The latest ruling raises fresh questions about how much authority future presidents will have to impose sweeping tariffs without congressional approval.

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