A split trade court found the administration’s legal basis insufficient, creating immediate questions for importers and policymakers nationwide. The full effects may unfold as appeals proceed.
Tariffs of 10% on all imports, implemented by the Trump administration, came under threat after a federal court ruled them illegal on Thursday, marking the second major blow to his economic policy this year.
In a 2–1 ruling, a panel of judges on the U.S. Court of International Trade concluded that the administration failed to provide grounds to apply tariffs under Section 122 of the 1974 Trade Act, after the Supreme Court’s decision earlier this year made part of the tariffs unlawful.
The decision also orders the government to stop collecting tariffs from the plaintiffs and to refund the money paid. While this affects only those plaintiffs, it represents a significant blow to the administration’s tariff policy implementation.
Section 122 allows the president to impose tariffs up to 15% on all imports without Congress’s approval under certain criteria. In this case, the judges found the Trump administration’s arguments for tariffs insufficient. In the majority, it was noted that the proclamation imposing the tariffs does not contain “large and serious deficits in the U.S. balance of payments,” as Congress understands it.
Tariffs may remain for other importers until July, but the administration retains the option to impose additional nationwide tariffs as it prepares to file an appeal of the fourth ruling.
“I’ll do it differently.”
– President Donald Trump
“Nothing surprises me about the courts. Nothing surprises me, so we always do this differently. We get one ruling, and we do it differently.”
– President Donald Trump
In February, the Supreme Court found a broad portion of Trump’s tariffs unlawful, after which the administration imposed new global tariffs, relying on a then-untried legal framework under the Trade Act of 1974. The legal cases highlight the chaos and uncertainty surrounding Trump’s economic policy, with frequent reports of new tariffs last year as importers tried to understand the latest changes.
A significant portion of uncertainty remains: importers can now file claims for refunds of amounts paid, but the refund process will be phased in, and it is unknown when the system will be up and running for all refunds due. Delays in payments are also possible if the administration takes further steps affecting the size of refunds.
This story has been updated with new details.