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A federal trade court ruled Thursday that President Donald Trump exceeded his legal authority when he imposed a new round of 10% global tariffs earlier this year, dealing another major blow to the administration’s aggressive trade agenda.
In a 2-1 decision, a three-judge panel on the United States Court of International Trade found that the tariffs were “invalid” and “unauthorized by law,” siding with small businesses that challenged the policy.
The ruling follows a separate Supreme Court defeat for the administration in February, when justices struck down Trump’s broader global tariff program imposed under the International Emergency Economic Powers Act.
The latest tariffs, imposed under Section 122 of the Trade Act of 1974, established a temporary 10% import tax on goods from nearly every country and were scheduled to expire July 24.
The majority ruled that Trump had overstepped the tariff authority delegated to the executive branch by Congress.
A dissenting judge argued that the law gave the president broader discretion to impose tariffs in response to trade concerns.
The administration is expected to appeal the ruling to the United States Court of Appeals for the Federal Circuit, with the case potentially heading back to the Supreme Court of the United States.
The lawsuit was brought by the state of Washington along with two businesses: spice company Burlap & Barrel and toy maker Basic Fun!.
“This is a huge victory,” said Jay Foreman, CEO of Basic Fun!, after the ruling. “We fought back today and we won, and we’re extremely excited.”
Jeffrey Schwab, litigation director for the Liberty Justice Center, which represented the businesses, said the scope of the ruling remains uncertain because it directly applies only to the named plaintiffs.
“It’s not clear” whether other companies will immediately stop paying the tariffs, Schwab said.
Trade attorneys said the ruling could trigger a wave of additional legal challenges from importers seeking refunds on tariff payments already made.
Dave Townsend, a trade lawyer with Dorsey & Whitney, said other companies are likely to ask courts for broader relief extending beyond the original plaintiffs.
“Other importers likely will now ask for a broader remedy that applies to more companies,” Townsend said.
Trump’s trade strategy has centered heavily on tariffs as a tool to protect American manufacturing and pressure foreign trading partners.
Last year, the administration declared the United States’ longstanding trade deficit a national emergency under IEEPA to justify imposing sweeping import taxes on goods from countries around the world. The Supreme Court ruled in February that the law did not authorize such expansive tariffs.
The Constitution grants Congress the authority to levy taxes and tariffs, though lawmakers have delegated some powers to presidents through trade statutes.
Despite the legal setbacks, the administration is already pursuing alternative paths to impose new tariffs.
The Office of the United States Trade Representative is conducting investigations into whether major trading partners, including China, the European Union and Japan, are overproducing goods in ways that disadvantage U.S. manufacturers.
Federal officials are also reviewing whether roughly 60 economies are adequately enforcing bans on products made with forced labor.
