A recent ruling from a U.S. trade court has challenged President Donald Trump’s tariff approach by deeming his 10% temporary global duties as unjustified under a trade law from the 1970s. However, the court only halted the tariffs for two private importers and the state of Washington, leaving them intact for other importers until any potential appeal by the Trump administration is resolved. These temporary tariffs are set to expire in July.
The court criticized Trump’s imposition of the tariffs under Section 122 of the Trade Act of 1974, with one judge suggesting that it was premature to declare victory for the plaintiffs. This ruling, affecting a set of tariffs nearing expiration, represents a setback for Trump’s broader tariff plans and precedes his upcoming trade discussions with Chinese President Xi Jinping in Beijing.
The decision paves the way for a legal dispute over substantial tariff refunds, following the U.S. Supreme Court’s invalidation of Trump’s extensive global tariffs under a national emergencies law three months ago. Trump expressed dissatisfaction with the trade court ruling, attributing it to “two radical left judges.”
Despite this setback, the Trump administration plans to reintroduce broad tariffs on key trading partners by utilizing another law, Section 301 of the Trade Act of 1974, which addresses unfair trade practices. The Court of International Trade in New York declined to impose a universal injunction blocking the tariffs for all importers, rejecting a plea from a coalition of states led by Democrats.
The court acknowledged the standing of Washington as an importer affected by the tariffs, as the state provided evidence of tariff payments made through the University of Washington. Additionally, two small businesses, toy company Basic Fun! and spice importer Burlap & Barrel, contended that the new tariffs were an attempt to circumvent a previous Supreme Court decision overturning Trump’s 2025 tariffs imposed under the International Emergency Economic Powers Act.
The court’s ruling underscored that the law invoked by Trump was not suitable for addressing the trade imbalances cited in his order. Canadian exports compliant with the Canada-U.S.-Mexico Agreement were exempt from the global tariff imposed in February. It is anticipated that the administration will appeal the recent decision, possibly escalating the case to higher courts.
“This decision is a significant victory for American companies reliant on global manufacturing to deliver competitive products,” stated Jay Foreman, CEO of Basic Fun!, in response to the ruling. The ruling was praised for providing clarity and stability for businesses navigating global supply chains. Jeffrey Schwab, representing the importers, noted that the ruling’s limited scope raises questions about its implications.
Economists have cast doubt on the rationale behind the new tariffs, given the absence of a balance-of-payments crisis in the U.S. Former trade officials anticipate a challenge from the administration and the potential imposition of permanent tariffs under different authority later this year. Refunds under Section 122 are contingent on the outcome of the appeals process. Schwab suggested that other companies might pursue legal action to seek refunds, depending on the administration’s response to the tariffs’ scheduled expiration on July 24.