U.S. Trade Court Rules Trump's 10% Global Tariff Illegal

A panel of judges at the U.S. Court of International Trade ruled that President Trump's 10% global tariff on most imports violates U.S. trade law. The 2-1 decision found that Section 122 of the 1974 Trade Act does not authorize the levies because the cited balance-of-payments deficits do not meet the statutory standard in a floating exchange-rate system.

The court rejected the administration's interpretation that the president could unilaterally redefine the term. The tariff was imposed on Feb. 24 after the Supreme Court struck down an earlier round of duties. Trump had invoked the never-before-used provision to impose temporary surcharges up to 15% to address what his advisers called fundamental international payments problems.

The levies were set to run until late July. Chief Judge Mark A. Barnett and Judge Claire R. Kelly wrote that Congress could not have intended to grant such expansive authority. They noted that if the president could select among sub-accounts to declare a deficit whenever any account was imbalanced, the limitation would have no meaning.

The court issued a permanent injunction limited to the two plaintiff importers but signaled that similar suits could follow. Judge Timothy C. Stanceu dissented on the timing and the majority's interpretation of the statute's legislative history. He argued the parties should have had an opportunity to respond before the court adopted its own reading of the law.

Hours before the ruling became public, Trump threatened to raise tariffs on the European Union to much higher levels if the bloc does not drop its duties on U.S. goods to zero by July 4. The deadline coincides with the 250th anniversary of American independence.

Trump issued the ultimatum after a phone call with European Commission President Ursula von der Leyen. Von der Leyen responded that the EU was making good progress toward tariff reduction and remained committed to implementing last year's trade agreement.

Under that deal, U.S. tariffs on EU exports would be set at 15%, down from Trump's earlier threat of 30%. The agreement received conditional approval from the European Parliament in March but still requires endorsement by all 27 member states. Negotiators from the European Parliament and EU governments are scheduled to meet again on May 19 in Strasbourg.

Earlier talks ended without full agreement on safeguards sought by European lawmakers, including exclusions for steel and aluminum products from any future U.S. metal tariffs.

The court's ruling is narrow in scope and does not block the 10% tariffs for all importers. It grants relief only to the two companies that sued and does not require nationwide refunds at this stage. Legal observers expect additional importers to file similar challenges seeking both injunctions and refunds.

The decision comes one week before Trump's scheduled meeting with China's President Xi Jinping. It removes one of the president's primary negotiating tools at a time when his broader tariff strategy has faced repeated legal setbacks. Trump told reporters he would pursue the tariff agenda through other authorities.

“So, we always do it a different way. We get one ruling, and we do it a different way.”

The administration is expected to accelerate ongoing Section 301 investigations that could produce new tariffs as soon as July. Industry groups have urged officials to limit any new duties to China rather than apply them broadly.

Last year's Supreme Court decision invalidated Trump's initial round of so-called reciprocal tariffs imposed under the International Emergency Economic Powers Act. That ruling triggered refund requests now being processed by customs authorities. Trump has publicly criticized companies that seek those refunds and praised those that have not.

The current case centered on whether Section 122, written in the era of the gold standard, can be used in today's monetary system. Importers argued that large and serious balance-of-payments deficits cannot occur under floating exchange rates in the manner required by the statute.

The court agreed that the president's justification was inadequate. Small businesses that joined the litigation called the tariffs an attempt to circumvent the Supreme Court decision. The ruling provides them a legal victory but limited immediate economic relief given the decision's narrow application.

Business groups have warned that sustained tariff uncertainty raises costs for manufacturers, retailers and consumers while complicating supply chains. The administration maintains that tariffs remain a necessary tool to address trade imbalances and encourage domestic production.