Federal Court Rules Trump’s 10% Global Tariffs Unlawful Under Trade Act of 1974

A federal court ruled Thursday that President Donald Trump’s 10% across-the-board tariffs are unlawful, finding the administration misread the law used to justify the sweeping levies under Section 122 of the Trade Act of 1974.

The Court of International Trade issued a 2-1 decision that the Trump administration lacked justification to enact tariffs under the 1974 trade law, and it granted an injunction for two small businesses and the state of Washington while dismissing the claims brought by larger groups of states because they lacked standing.

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NBC News reported the court found the tariffs are “invalid″ and ”unauthorized by law,” and said the ruling directly applied only to three plaintiffs: the state of Washington and two businesses, spice company Burlap & Barrel and toy company Basic Fun!.

The dispute boiled down to the definition of the phrase “balance-of-payments deficits,” with the Court of International Trade rejecting the Trump administration’s argument that the term is the same as a “trade deficit,” and the global 10% tariff taking effect in February and set to expire in late July.

Trump reacted to the ruling Thursday night by telling reporters his administration would “do it a different way,” adding, “Nothing surprises me with the courts,” as the administration was expected to appeal.

CNN said the Thursday ruling calls for the administration to cease collecting these tariffs from the plaintiffs and refund prior payments, while noting the tariffs can continue to remain in place for all other importers besides the plaintiffs through July.

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Politico reported that the court did not issue nationwide relief for the hundreds of thousands of importers that have paid or continue to pay the tariffs, but it set a precedent that other companies could point to in any legal effort to pursue similar relief.

Politico also quoted Basic Fun! CEO Jay Foreman calling the decision an “important win for American companies that rely on global manufacturing,” while the We Pay the Tariffs coalition’s Dan Anthony said, “The Court should have gone further and blocked collection of these tariffs during any appeal.”

The ruling leaves the temporary 10% tariffs in place for all other importers while the appeal process plays out, and the tariffs are expected to expire in July, according to Reuters as carried by Red Lake Nation News.

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Financial Times and other coverage described the legal back-and-forth as a second major blow to Trump’s signature economic policy, with the Supreme Court earlier this year affirming a decision from the Court of International Trade blocking Trump’s first round of tariffs.

NBC News said the decision could open the door for more companies to request that the tariffs be thrown out and that any payments they’ve made be refunded, and it quoted trade lawyer Dave Townsend saying, “Other importers likely will now ask for a broader remedy that applies to more companies,”.

At the same time, the Trump administration is taking steps to replace the struck-down tariffs, with NBC News reporting that the Office of the U.S. Trade Representative is looking into whether 16 U.S. trading partners are overproducing goods and whether 60 economies do enough to prohibit the trade in products created by forced labor.