A federal trade court ruled against President Trump’s temporary 10% global tariffs, declaring them illegal under a 1970s trade law, but delivered only a narrow victory by blocking the levies for just two private companies and Washington State while leaving them in place for all other importers.

Split Decision Limits Impact

The U.S. Court of International Trade issued a 2-1 decision finding that Trump’s use of Section 122 of the Trade Act of 1974 was unjustified for imposing the temporary duties. The court rejected requests from 24 states, mostly Democrat-led, to issue a universal injunction blocking the tariffs nationwide. Only toy company Basic Fun, spice importer Burlap & Barrel, and Washington State received relief after proving they directly paid the contested tariffs.

The ruling marks another setback for Trump’s tariff strategy three months after the Supreme Court struck down his sweeping global tariffs imposed under emergency powers. Trump dismissed the decision, blaming two radical left judges and telling reporters the administration would simply pursue tariffs using different legal authority. The temporary levies are scheduled to expire in July regardless of the court battle.

Administration Plans Next Move

The White House intends to resurrect broad tariffs on major trading partners by invoking Section 301 of the Trade Act of 1974, which addresses unfair trade practices and has withstood numerous legal challenges. Three Section 301 investigations are currently underway with completion expected in July. The court found that Trump improperly used Section 122, which allows duties up to 15% for 150 days to correct balance of payments deficits or prevent dollar depreciation.

What This Means

The narrow scope of the injunction ensures most importers continue paying the contested tariffs during any appeal process. Trade experts predict the Trump administration will appeal to the Federal Circuit Court and potentially the Supreme Court, setting up another protracted legal battle over billions in tariff refunds. The timing carries added significance as Trump prepares to meet Chinese President Xi Jinping in Beijing next week to discuss ongoing trade tensions between the world’s two largest economies.