A U.S. federal trade court on Thursday ruled that President Trump’s latest global 10% tariffs are unlawful.
The U.S. Court of International Trade issued the decision in a 2–1 ruling, stating that the tariffs introduced earlier this year were not supported by a 1974 trade law and were therefore ‘invalid’ and ‘unauthorized by law.’
The tariffs had been implemented in February, shortly after the Supreme Court struck down Trump’s earlier broad ‘Liberation Day’ tariffs, most of which were introduced in April 2025 under the International Emergency Economic Powers Act.
This marks the second time Trump’s tariff measures have been deemed unlawful, following the previous ruling that supported the Court of International Trade’s decision blocking the initial tariff package.
Section 122 of the Trade Act of 1974 allows temporary tariffs for up to 150 days in cases of severe balance‑of‑payments deficits or risks tied to currency stability. The administration claimed that the U.S. was experiencing a significant trade imbalance, pointing to a $1.2 trillion goods trade deficit and a current account deficit of around 4% of GDP.
However, the court dismissed the argument. The majority of judges concluded that the type of trade deficit cited by the administration did not satisfy the legal requirements set out in the law. They concluded that the government had exceeded the authority delegated by Congress, ruling that the tariffs could not be upheld under the law used to impose them.
The case was filed by small businesses dependent on global supply chains, who argued that the tariffs were intended to circumvent the earlier Supreme Court ruling that had already restricted the administration’s ability to impose broad trade penalties under emergency powers.
The Trump administration defended the policy, stating the tariffs were necessary to safeguard domestic industries and reduce reliance on imports.
The panel ordered the administration to stop collecting tariffs from the state of Washington and the two companies that brought the lawsuit. It also ordered the government to refund all tariffs paid by those three plaintiffs, along with interest. However, the ruling did not invalidate the tariffs nationwide or issue a blanket injunction.
The administration is expected to begin refunding businesses that paid duties under the IEEPA tariff program later this month.
The ruling is likely to be appealed. If it proceeds, the case would go to the U.S. Court of Appeals for the Federal Circuit in Washington and could eventually return to the Supreme Court.
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