Federal Court Rules Trump's 10% Global Tariff Unlawful Under Trade Act Section 122

Federal Court Rules Trump's 10% Global Tariff Unlawful

President Donald Trump’s tariffs have been ruled illegal—again. A three-judge panel at the U.S. Court of International Trade (CIT) ruled on Thursday evening that Trump’s 10% "global tariff" is unlawful. The president imposed the tariffs in February, just hours after the U.S. Supreme Court blocked his attempt to use emergency powers for a sweeping set of tariffs on most imports.

Tariffs Imposed Under Section 122 of the Trade Act of 1974

The new tariffs were implemented under Section 122 of the Trade Act of 1974, which permits presidents to impose temporary tariffs in response to "large and serious United States balance-of-payments deficits."

However, as Reason and other observers noted at the time, the U.S. does not have a balance-of-payments deficit—a critical distinction from the trade deficit the Trump administration sought to address with tariffs. This view was confirmed by the CIT, which ruled on Thursday that the president cannot impose tariffs under Section 122 without meeting the prerequisite.

"Nowhere does [Trump's executive order imposing the tariffs] identify balance-of-payments deficits within the meaning of Section 122 as it was enacted in 1974," the judges ruled. "Because of that, the executive order is invalid, and the tariffs imposed on Plaintiffs are unauthorized by law."

Lawsuit Challenging the Tariffs

The lawsuit challenging the tariffs was filed by the Liberty Justice Center on behalf of several small businesses. In a statement provided by the organization, Ethan Frisch and Ori Zohar, co-founders and co-CEOs of Burlap Barrel, an online spice retailer, said:

"This ruling is a major victory for small businesses like ours that depend on fair and predictable trade policy. These tariffs created real challenges for our company and for the farmers we partner with around the world. Today's decision helps ensure that businesses like ours are not unfairly burdened by unlawful trade restrictions."

Trump Administration Faces Slim Chances of Appeal

The Trump administration will have the opportunity to appeal Thursday’s ruling. However, the prospects for success appear slim, as Trump’s use of Section 122 disregards the plain language of the law and relies on a broad executive power where Congress explicitly provided a narrow one.

This latest defeat also likely means the Trump administration will once again have to refund revenue collected from illegal tariffs.

Trump’s Fifth Consecutive Tariff-Related Legal Loss

With this ruling, Trump has now suffered five consecutive losses in tariff-related cases during his second term. The previous "emergency" tariffs were ruled unlawful four times: by the CIT, a federal district court, a federal appeals court, and ultimately by the U.S. Supreme Court.

The president does not possess unchecked, unilateral power to impose tariffs for any reason at any time. Thursday’s ruling reinforces the principle that the rule of law prevails over executive overreach.

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