A split panel of the U.S. Court of International Trade in New York ruled Thursday that the 10% global tariffs President Donald Trump imposed after a stinging Supreme Court loss are illegal, delivering another judicial blow to a trade agenda built on expansive claims of executive authority.
The 2-1 decision found that Trump overstepped the tariff power Congress granted the president under Section 122 of the Trade Act of 1974. The tariffs are “invalid” and “unauthorized by law,” the majority wrote. The third judge on the panel dissented, arguing that the law allows the president broader leeway.
The ruling directly blocks the collection of tariffs from three plaintiffs: the state of Washington, spice importer Burlap & Barrel, and toy company Basic Fun! But Jeffrey Schwab, director of litigation at the libertarian Liberty Justice Center, which represented the two businesses, said it is “not clear” whether other companies would still have to pay.
“We fought back today and we won, and we’re extremely excited,” Basic Fun! CEO Jay Foreman told reporters after the ruling.
The decision is the second time this year the federal judiciary has struck down Trump’s tariff architecture. Last year, Trump invoked the 1977 International Emergency Economic Powers Act to declare the nation’s longstanding trade deficit a national emergency, imposing sweeping double-digit tariffs on nearly every country. The Supreme Court ruled on Feb. 28 that IEEPA did not authorize those levies, citing the Constitution’s grant of taxing power to Congress.
In response, the administration shifted legal footing, imposing the 10% worldwide tariffs under Section 122 of the Trade Act of 1974. Those tariffs were set to expire July 24. Thursday’s ruling undercuts that second legal theory as well.
Dave Townsend, a trade lawyer at Dorsey & Whitney, said the decision will open the door for more companies to request that the tariffs be thrown out and any payments they have made refunded. “Other importers likely will now ask for a broader remedy that applies to more companies,” Townsend said, though he cautioned the case could reach the Supreme Court.
The administration is already pursuing a third path. The Office of the U.S. Trade Representative is conducting two investigations that could result in new tariffs — one examining whether 16 trading partners, including China, the European Union, and Japan, are overproducing goods in ways that disadvantage U.S. manufacturers, and another probing whether 60 economies accounting for 99% of U.S. imports do enough to prohibit trade in products created by forced labor.
The administration is expected to appeal Thursday’s decision to the U.S. Court of Appeals for the Federal Circuit in Washington, with a potential return to the Supreme Court.