A federal court on Thursday blocked President Donald Trump’s temporary 10% global tariffs, ruling the administration exceeded the tariff authority Congress allowed under a federal trade law. The decision by a split three-judge panel of the Court of International Trade in New York said the tariffs were “invalid” and “unauthorized by law,” after small businesses and the state of Washington challenged the measure.
The panel found in a 2-1 decision that Trump’s use of the tariff power was not authorized, according to the majority’s reasoning. The third judge on the panel dissented, saying the law allows the president more leeway on tariffs, leaving the outcome dependent on how appellate courts read the statute’s scope.
At issue were the temporary 10% worldwide tariffs imposed under Section 122 of the Trade Act of 1974. The administration had set the tariffs to expire July 24, but the court’s ruling directly blocked collection of the tariffs from the plaintiffs, including Washington state and two named businesses: Burlap & Barrel, which makes and sells spice, and Basic Fun!, which makes toys.
The court’s decision also raised questions about whether other importers would still face the tariffs, in the view of an attorney for the companies. Jeffrey Schwab, director of litigation at the Libertarian Liberty Justice Center, told reporters Thursday, “It’s not clear” whether other businesses would have to continue to pay the tariffs.
Basic Fun! CEO Jay Foreman said, “We fought back today and we won, and we’re extremely excited,” according to the report. Schwab’s comments focused on how widely the court order would apply, and another lawyer said the litigation could widen further if the administration appeals.
Dave Townsend, a trade lawyer at Dorsey & Whitney, said the ruling could open the door for additional companies to ask for the tariffs to be thrown out and for refunds of payments already made. Townsend added in the report that other importers likely would seek a broader remedy, while also warning the case could reach the Supreme Court as the dispute moves through the federal appeals process.
The ruling came after the Supreme Court in February struck down even broader double-digit tariffs that Trump had imposed last year on almost every country on Earth. The February decision followed an earlier approach by the administration that relied on the International Emergency Economic Powers Act, which the Supreme Court said did not authorize those sweeping tariffs.
The administration’s tariff strategy has also included steps aimed at replacing measures invalidated by higher courts. The report said the Office of the U.S. Trade Representative is conducting two investigations that could end in more tariffs—one into whether 16 trading partners, including China, the European Union and Japan, are overproducing goods that drive down prices and disadvantage U.S. manufacturers, and another into whether 60 economies, from Nigeria to Norway and accounting for 99% of U.S. imports, do enough to prohibit trade in products created by forced labor.
If the administration appeals Thursday’s decision, the report said it would likely first seek review at the U.S. Court of Appeals for the Federal Circuit in Washington and, potentially, return to the Supreme Court.