U.S. Trade Court Strikes Down Trump's Replacement 10% Global Tariffs in 2-1 Ruling

The U.S. Court of International Trade on Thursday struck down President Trump's second attempt at a sweeping global tariff regime, ruling 2-1 that his February executive order imposing a 10 percent levy on virtually every imported good is "invalid" and "unauthorized by law." The decision deals a fresh legal blow to a White House that had pivoted to Section 122 of the 1974 Trade Act after the Supreme Court in February rejected Trump's first attempt under the International Emergency Economic Powers Act, finding the president had exceeded his statutory authority by treating routine trade deficits as national emergencies.

Writing for the majority, Judge Jane Restani and Judge Gary Katzmann held that Section 122 authorizes the president to impose temporary tariffs only in response to "large and persistent" balance-of-payments deficits — a precondition the panel said is plainly absent on the current economic record. "The statute does not grant the executive an unbounded toolkit for restructuring American trade policy by decree," the majority wrote. The dissenting judge, Timothy Reif, argued that the question of whether a balance-of-payments crisis exists should be left to presidential judgment, but he too acknowledged the administration's evidentiary record was "thin."

The practical scope of Thursday's decision is narrow but politically explosive. The court limited its order to the two importers who brought the case — small-business plaintiffs Learning Resources Inc. and Hand2Mind Inc., joined by the state of Washington — meaning other companies are not yet entitled to refunds on the billions of dollars in duties already collected since February. The administration immediately announced it will appeal to the Federal Circuit and seek an emergency stay, a process that legal observers expect to land back at the Supreme Court before the end of the term. Treasury Secretary Scott Bessent said in a statement Thursday evening that the tariffs "remain in force pending appeal."

Markets reacted swiftly. The S&P 500 climbed 1.4 percent in late trading after the ruling, the dollar slipped against the yen and euro, and shipping stocks led by Maersk and ZIM jumped on hopes of duty refunds. The American Apparel and Footwear Association estimated that the targeted tariffs alone have added more than $42 billion in costs to U.S. importers since February, much of which has been passed through to consumer prices that contributed to last week's hotter-than-expected inflation print. The Tax Foundation said striking the duties down permanently would add roughly 0.4 percentage points to GDP growth over four years.

Democratic leaders, who have spent months arguing the tariffs are functionally illegal, said the ruling validates their case. Sen. Ron Wyden, ranking Democrat on the Senate Finance Committee, said the panel "called Trump's bluff on a fake balance-of-payments emergency." Trump, posting on Truth Social within an hour of the ruling, blasted the decision as "a radical attack on America by activist judges" and vowed to sign a new executive order Friday invoking national security authorities under Section 232. Several conservative legal scholars, including Adam White at AEI, warned that path is also constitutionally fraught, predicting yet another round of litigation and another constitutional showdown over the limits of presidential trade power before the 2026 midterms.