News / Latest court defeat threatens legal basis of Trump tariff strategy

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Donald Trump’s administration has suffered a major legal setback after a US federal trade court ruled that its new 10% global tariff regime was imposed unlawfully.

Yesterday, the US Court of International Trade (doc 26-47) ruled it exceeded powers granted under Section 122 of the Trade Act of 1974 when the administration imposed temporary tariffs on most imports entering the US.

The case was brought by a coalition of US states, led by Oregon, alongside import-dependent businesses, including spice importer Burlap & Barrel and toy company Basic Fun.

Section 122 allows a president to impose temporary import surcharges of up to 15% during serious “balance-of-payments” problems. However, the three-judge panel ruled that the decision relied instead on concerns such as the US trade deficit and current account deficit – concepts the court said were legally distinct from the conditions set out in the statute.

In one of the ruling’s sharpest passages, the judges wrote: “When Congress grants the power to impose tariffs, it does so clearly and with careful constraints.”

The court also stated that “the president enjoys no inherent authority to impose tariffs during peacetime”.

The judges concluded that the proclamation was, therefore, “ultra vires”, or “beyond the president’s legal authority”.

However, the immediate effect of the ruling is narrower than some headlines suggest. The court granted relief only to the plaintiffs that demonstrated direct injury – Washington state and the two importers. Arguments for the other states involved in the lawsuit were dismissed for ‘lack of standing’, because they could not show sufficiently direct economic harm.

The administration is expected to appeal, meaning the tariffs could remain in place while the case moves to higher courts.

The ruling follows a separate Supreme Court decision earlier this year limiting the administration’s use of emergency economic powers to impose tariffs, adding to growing judicial scrutiny of expansive presidential trade authority.