Federal Court Blocks Trump’s Section 122 Tariffs, Citing Constitutional Limits on Presidential Power

The U.S. Court of International Trade has delivered a landmark ruling blocking Donald Trump’s Section 122 tariffs, which imposed a 10% levy on a wide range of imported goods from multiple countries. The decision, issued on June 28, 2025, marks a significant legal setback for the Trump administration’s trade policy and reinforces constitutional checks on executive authority.

The 2-1 decision addresses two consolidated lawsuits challenging the tariffs. One lawsuit was filed by the Liberty Justice Center on behalf of two importers. The other was brought by 24 state governments, led by Oregon. The court’s ruling emphasizes the separation of powers and prevents what it describes as an unlawful expansion of presidential power.

Legal Basis: What Is Section 122 of the Trade Act of 1974?

Section 122 of the Trade Act of 1974 grants the president authority to impose tariffs of up to 15% for up to 150 days in response to specific economic conditions, including:

• Fundamental international payments problems
• Large and serious U.S. balance-of-payments deficits
• An imminent and significant depreciation of the dollar
• A need to cooperate with other countries to address an international balance-of-payments disequilibrium

The Trump administration invoked this authority in Proclamation No. 11012, issued in January 2025, to justify the 10% tariffs. However, the court found that the proclamation misapplied the statute’s requirements.

Court Finds Tariffs Misaligned with Statutory Definition

The majority opinion, written by Judge Jane A. Restani, ruled that the administration failed to demonstrate the existence of a balance-of-payments deficit as defined in the 1974 law. The court clarified that the statute refers to deficits in liquidity, official settlements, or basic balance—terms tied to the fixed exchange rate system under the Bretton Woods agreement, which ended in 1973.

“The legislative history of the Trade Act of 1974 reveals that Congress understood balance-of-payments deficits to refer, at the time, to deficits in (1) liquidity, (2) official settlements, or (3) basic balance.”

The administration argued that the president should have broad discretion to define what constitutes a balance-of-payments deficit. The court rejected this claim, warning that such an interpretation would grant the president virtually unlimited tariff authority and raise constitutional nondelegation issues.

Constitutional Concerns: Separation of Powers at Stake

The ruling underscores the judiciary’s role in limiting executive overreach. The court emphasized that allowing the president to unilaterally determine the existence of a balance-of-payments deficit would undermine Congress’s legislative authority and violate the constitutional separation of powers.

“The statute recognizes the distinction between current account deficits and balance-of-payments deficits,” the court stated. “The administration’s reliance on current account deficits and trade deficits does not satisfy the statutory requirements.”

Reactions and Implications

The decision has been hailed by legal experts and state attorneys general as a critical safeguard against executive overreach in trade policy. Oregon Attorney General Ellen Rosenblum, a lead plaintiff in the state-led lawsuit, stated:

“This ruling reaffirms that no president can unilaterally impose tariffs under the guise of economic emergency without clear statutory authority. The separation of powers is not negotiable.”

The Trump administration has not yet indicated whether it will appeal the decision to the U.S. Supreme Court. If upheld, the ruling could set a precedent limiting future administrations’ use of emergency trade powers.