President Donald Trump’s tariff offensive has suffered a sharp courtroom defeat after a federal trade court ruled that his 10 per cent global import surcharge exceeded the authority granted to the White House under a 1970s trade law.A divided three-judge panel of the United States Court of International Trade found that the administration could not use Section 122 of the Trade Act of 1974 to justify a blanket tariff on goods entering the country. The majority held that the statute was designed to address balance-of-payments pressures, not to give the president broad power to impose across-the-board duties on the basis of trade deficits.
The ruling marks another setback for Trump’s economic programme, which has placed tariffs at the centre of efforts to reshape trade relations, revive domestic manufacturing, pressure foreign governments and raise revenue. It follows a Supreme Court decision in February that rejected broader tariff measures imposed under emergency economic powers, forcing the administration to shift to another legal route.
Trump imposed the 10 per cent surcharge in February through Proclamation 11012, arguing that America’s trade deficit, current account position and negative net international investment position justified temporary import duties. Section 122 allows the president to impose tariffs of up to 15 per cent for 150 days in response to serious balance-of-payments problems. The court found that the administration’s interpretation stretched the law beyond the limits intended by Congress.
The judgment does not immediately eliminate the duties for all importers. Relief was limited to the plaintiffs with standing, including Burlap & Barrel, a New York-based spice importer, Basic Fun, a Florida-based toy company, and the State of Washington in its capacity as an importer. The court declined to issue a universal injunction, leaving most companies still exposed to the surcharge while the appeal proceeds.
The administration has already appealed, and trade officials have signalled confidence that higher courts will reverse the decision. The legal battle is likely to move quickly because the tariff is temporary and is set to expire in July unless Congress extends it. That timetable adds pressure on the White House to preserve the measure while preparing alternative tariff actions under more established trade statutes.
At the centre of the dispute is the balance between presidential discretion and congressional control over taxes and trade. The court’s majority said the power granted under Section 122 was limited and conditional. Its reasoning echoed a broader judicial concern that tariff authority cannot be converted into a general tool of economic policy unless Congress has clearly authorised such action.
The dissenting judge took a more deferential view, suggesting that the president should have wider leeway in determining when trade and payments conditions justify temporary action. That dissent is expected to form part of the administration’s appeal strategy, particularly as Trump’s lawyers argue that courts should avoid second-guessing executive judgments in foreign commerce.
For businesses, the ruling deepens uncertainty rather than ending it. Importers have spent months adjusting prices, contracts and supply chains around shifting tariff rules. Small firms with narrow margins face particular strain because even a 10 per cent duty can alter landed costs, working capital needs and consumer pricing. Larger companies have more room to reroute supply chains, seek exclusions or absorb part of the cost.
Global trading partners are also watching the case closely. A broad tariff applied to all imports affects exporters across Asia, Europe and North America, even when the immediate legal relief is narrow. Suppliers of consumer goods, toys, spices, electronics, machinery, textiles and industrial inputs have been assessing whether the court ruling could open the way for wider refund claims or fresh lawsuits.
The decision lands as Trump prepares for further trade negotiations, including high-stakes engagement with China. Tariffs have been used by the administration as leverage in talks over market access, industrial policy, technology controls and supply-chain security. Any judicial narrowing of tariff powers could weaken the White House’s negotiating position, though alternative tools remain available.
Section 301 of the Trade Act is emerging as the administration’s likely fallback. That route has survived earlier scrutiny but requires investigations, procedural steps and a clearer record of unfair trade practices. It is slower than emergency-style tariff action, yet it may offer a firmer legal foundation for targeted duties against specific countries or sectors.
The political stakes are considerable. Trump has argued that tariffs protect jobs, strengthen bargaining power and generate revenue. Critics say they raise costs for households and businesses, invite retaliation, and blur the constitutional line between executive action and congressional taxing power. The latest ruling gives those critics fresh legal ammunition while leaving the administration enough room to fight on.
The case also underscores a broader transformation in trade policy. Tariffs are no longer episodic measures tied to narrow disputes; they have become a recurring instrument of economic statecraft. Courts are now being asked to decide how far that shift can go without explicit congressional approval.
The immediate practical effect may be limited, but the legal signal is clear. Trump’s tariff strategy faces a judiciary increasingly unwilling to accept expansive readings of statutes written for narrower purposes, even as the White House searches for new ways to keep import duties at the centre of its economic agenda.