- A federal trade court decided that President Donald Trump's temporary 10% tariffs were improperly justified under an old law (Section 122). However, the court did not block the tariffs for everyone—it only stopped them for two private companies (Basic Fun! and Burlap & Barrel) and the State of Washington. Most importers still have to pay the tariffs for now.
- The court found that Trump used a 1970s law meant to fix short-term balance-of-payments problems (like a weak dollar), but the tariffs were actually aimed at large trade deficits, which isn't what the law was designed for. This legal mismatch was the main reason for the ruling.
- A group of 24 states asked for a nationwide halt to the tariffs, but the court rejected the request, saying the states lacked legal standing. This means the 10% tariffs remain in effect for the vast majority of importers while the government decides whether to appeal.
- The Trump administration is widely expected to appeal the ruling to a higher court (the Federal Circuit and possibly the Supreme Court). In the meantime, the 10% tariffs are scheduled to expire in July, and the administration is working on replacing them with permanent tariffs under a different law (Section 301), which targets unfair trade practices.
- For companies that import goods, the uncertainty caused by these tariffs is a big problem. The narrow court ruling offers relief to a few businesses, but most still face higher costs. These costs are often passed on to American consumers, raising prices. The broader trade agenda remains in legal limbo, with billions of dollars in tariffs hanging in the balance.
A federal trade court has ruled against President Donald Trump's latest 10% global tariff strategy, delivering a legal setback that threatens to complicate the administration's broader trade agenda.
However, the decision carries significant limitations that leave most importers still facing the levies for the time being.
The U.S. Court of International Trade in New York issued a 2-1 ruling that the president's temporary 10% duties, imposed under Section 122 of the Trade Act of 1974, were improperly justified. The court found that the tariffs—which were meant to address balance-of-payments deficits—were not an appropriate response to the kinds of trade deficits cited by Trump in his February executive order.
Limited scope of the ruling
Despite the rebuke, the court declined to issue a sweeping nationwide injunction.
Instead, it blocked the tariffs only for two private importers—toy company Basic Fun! and spice importer Burlap & Barrel—along with the State of Washington, which had argued it paid tariffs through the University of Washington, a public research institution.
BrightU.AI's Enoch AI engine explains that a larger coalition of 24 states, mostly led by Democrats, had sought a universal injunction, but the court rejected that request, ruling that the states lacked standing.
"Private plaintiffs make no specific arguments for a universal injunction," the opinion stated. "Costs to one plaintiff is not an appropriate basis for the imposition of a universal injunction."
The ruling leaves the 10% temporary tariffs in place for the vast majority of importers while any appeal by the Trump administration plays out. Those tariffs are currently scheduled to expire in July.
A pattern of legal challenges
This decision comes just months after the U.S. Supreme Court struck down Trump's sweeping global tariffs imposed under the International Emergency Economic Powers Act, a separate national emergencies law. Following that ruling, the administration pivoted to Section 122—a 1970s-era law that allows for duties of up to 15% for up to 150 days to correct "balance of payments deficits" or prevent a depreciation of the dollar.
Legal experts noted that Trump's Section 122 tariffs represented an attempt to circumvent the Supreme Court's earlier decision. The court's latest ruling makes clear that this back-up strategy also faces significant legal hurdles.
The administration has argued that a serious balance-of-payments deficit exists, citing a $1.2 trillion annual U.S. goods trade deficit and a current account deficit of 4% of the GDP.
But economists have been skeptical. Gita Gopinath, a former senior official at the International Monetary Fund, has publicly questioned whether the U.S. is truly facing a balance-of-payments crisis, noting the country has not experienced exorbitant increases in borrowing costs or lost access to financial markets.
The road ahead for trade policy
The White House and the U.S. Trade Representative's office have not yet commented on the ruling. The administration is widely expected to appeal the decision, likely setting up a protracted legal battle over billions of dollars in tariff refunds.
Dave Townsend, an international trade lawyer, said the ruling "undoubtedly will be appealed by the United States and thus sets the stage for further consideration by the U.S. Court of Appeals for the Federal Circuit and the Supreme Court." He noted that other importers will likely now ask the court for a broader remedy that applies to more companies.
Ryan Majerus, a former senior U.S. Commerce official, predicted the administration will continue collecting the 10% tariffs until July 24, at which point officials hope to have permanent tariffs in place under a different legal authority—Section 301 of the Trade Act of 1974, which covers unfair trade practices. The administration currently has three Section 301 tariff investigations underway, due for completion in July.
Ripple effects for businesses
For companies like Basic Fun! and Burlap & Barrel, the ruling offers a measure of relief, though its narrow application raises questions about what comes next. Jay Foreman, CEO of Basic Fun!, called the decision "an important win for American companies that rely on global manufacturing," adding that "unlawful tariffs make it harder for businesses like ours to compete and grow."
Jeffrey Schwab, who represented the importers, acknowledged that applying the ruling only to his clients "brings up a lot of questions about how this will play out." Schwab said other companies could likely file lawsuits seeking refunds, though that depends in part on whether the government appeals or lets the tariffs expire as scheduled.
As the legal battles continue, the Trump administration still intends to resurrect broad tariffs on major trading partners using Section 301. The president is also scheduled to meet with Chinese President Xi Jinping in Beijing to discuss ongoing trade tensions, adding a diplomatic dimension to an already complex situation.
For now, the ruling stands as a significant but incomplete check on the president’s tariff authority, leaving the fate of billions of dollars in duties uncertain and the broader trade agenda in legal limbo.
Watch this clip about Trump's promise to give each American $2,000 in tariff money.
This video is from the NewsClips channel on Brighteon.com.
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