Set back for Trump: US trade court rules 10% global tariffs as 'invalid'

A US trade court on Thursday struck down President Donald Trump’s latest 10 per cent global tariffs, ruling that the measures were not legally justified under a 1970s trade law. However, the court’s order applied only to two small businesses and the state of Washington, allowing the tariffs to remain in force for all other importers during any appeal process.

Reuters reported that the US Court of International Trade delivered a 2-1 verdict in favour of toy maker Basic Fun!, spice importer Burlap & Barrel, and Washington state, all of whom had challenged the tariffs introduced on February 24. One judge dissented, saying it was too early to rule in favour of the businesses.

The court refused to grant a broader injunction sought by a coalition of 24 mostly Democratic-led states, saying they lacked the legal standing required to seek relief on behalf of all importers.

According to the ruling, most states involved in the lawsuit except Washington could not prove they had directly paid or would pay the Section 122 tariffs. Washington, however, submitted evidence showing tariff payments made through the University of Washington, a public research institution, added the report.

The businesses argued that the tariffs were an attempt to work around a previous US Supreme Court ruling that had invalidated Trump’s earlier 2025 tariff measures imposed under the International Emergency Economic Powers Act. The Supreme Court had found those emergency-based tariffs exceeded presidential authority.

Following that setback, Trump announced a fresh 10 per cent tariff regime in February using Section 122 of the Trade Act of 1974, which permits temporary duties of up to 150 days to address severe balance-of-payments problems or prevent a sharp decline in the value of the US dollar.

In Thursday’s decision, the trade court concluded that the law did not apply to the type of trade deficits cited by Trump in his order.

“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,” said Basic Fun! CEO Jay Foreman, according to Reuters report.

“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 added.

The Trump administration had defended the tariffs by pointing to a $1.2 trillion US goods trade deficit and a current account deficit amounting to 4 per cent of GDP, arguing that the country faced a serious balance-of-payments imbalance.