The US Court of International Trade has ruled that President Donald Trump’s new 10% global tariffs were unlawful, creating another major setback for his trade policy. The court said the administration did not have enough legal authority to impose the tariffs under a rarely used trade law from 1974.
The tariffs were introduced in February after the US Supreme Court struck down a larger group of Trump-era tariffs that had been imposed in 2025. In response, Trump quickly used Section 122 of the Trade Act of 1974 to place a temporary 10% tariff on imports from most countries.
Section 122 allows a US president to impose tariffs of up to 15% for a maximum of 150 days if the country faces serious balance of payments problems or risks to the US dollar. Trump’s administration argued that America’s massive trade deficit and current account deficit were serious enough to justify the emergency action.
Government lawyers told the court that the US currently faces a $1.2 trillion annual goods trade deficit and a current account deficit equal to around 4% of US GDP. They argued these economic imbalances matched the type of crisis Congress had in mind when the law was created.
However, the businesses that challenged the tariffs argued the law was never meant for modern trade deficits. They said the statute was originally designed for monetary emergencies that existed before the US abandoned the gold standard in the 1970s. According to the plaintiffs, the current economic situation does not qualify as a balance of payments crisis.
In a 2-1 decision, the trade court sided with the small businesses and ruled that Trump’s across the board tariffs were not justified under Section 122. One judge disagreed and said it was too early to fully side with the businesses, but the majority ruled against the administration.
The case was brought by several small companies that said the tariffs increased costs and disrupted supply chains. Jay Foreman, CEO of toy company Basic Fun!, said the decision was an important victory for businesses that depend on global manufacturing and affordable imports to stay competitive.
Even though the court ruled against the tariffs, importers will still have to keep paying the 10% duties for now because the Trump administration is appealing the decision. The ruling adds more uncertainty to US trade policy and could become another major legal battle over presidential tariff powers.
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