US trade court rules against Donald Trump's 10% global tariffs under 1974 law

A US trade court on Thursday (May 7) handed President Donald Trump another setback, ruling against the 10 per cent global tariffs he introduced after the Supreme Court struck down several earlier duties. In a 2-1 decision, the US Court of International Trade blocked the tariffs from being enforced against two companies and the state of Washington for now, although the ruling could pave the way for broader legal challenges in the future. The court found that the latest tariffs were not justified under the 1970s law cited by the Trump administration during implementation.

Trump had imposed the temporary 10 per cent tariff in February, shortly after the Supreme Court invalidated many of his earlier global duties. The administration argued that the measure was necessary to address balance-of-payments deficits under Section 122 of the Trade Act of 1974. The tariffs are set to remain in effect only until late July unless Congress approves an extension. Meanwhile, the administration has been exploring more permanent ways to revive Trump’s trade strategy.

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As part of that effort, US officials have launched new investigations into dozens of trading partners over concerns related to forced labor and industrial overcapacity, moves that could eventually result in additional tariffs or other trade measures. The Court of International Trade directed the defendants to comply with the ruling within five days and ordered that the importers involved in the lawsuit receive refunds. The Trump administration is expected to appeal the decision.

"Section 122 was passed in response to a specific historical crisis that resulted in the United States's currency and gold reserves being depleted," said Liberty Justice Center senior counsel Jeffrey Schwab after the ruling." The United States has a trade deficit, not a balance-of-payments deficit, and does not have an international payments problem," Schwab said in a statement.

Trump’s sector-specific tariffs on products such as steel, aluminum, and automobiles remain unaffected by the ruling and related legal challenges.

Still, Thursday’s judgment marks another hurdle for Trump’s broader tariff agenda. After the Supreme Court previously dealt a major blow to Trump’s trade policy, businesses across the United States rushed to seek refunds.

US Customs and Border Protection estimated in March that more than 330,000 importers could qualify for refunds following the Supreme Court’s earlier decision. The tariffs that were previously struck down under the International Emergency Economic Powers Act had collected around $166 billion in duties and deposits.