NEW YORK, May 7 (Reuters) – The U.S. trade court on Thursday ruled against President Donald Trump’s latest 10% global tariffs, finding across-the-board tariffs were not justified under a 1970s trade law.
The U.S. Court of International Trade ruled in favor of small businesses that challenged the tariffs, which took effect on February 24. The ruling was 2-1, with one judge saying it was premature to grant victory to the small business plaintiffs.
The small businesses had argued the new tariffs were an attempt to sidestep a landmark U.S. Supreme Court decision that struck down the Republican president’s 2025 tariffs imposed under the International Emergency Economic Powers Act.
In his February order, Trump invoked Section 122 of the Trade Act of 1974, which allows for duties for up to 150 days to correct serious “balance of payments deficits” or head off an imminent depreciation of the dollar.
Thursday’s court ruling found the law was not an appropriate step for the kinds of trade deficits that Trump cited in his February order.
“This decision is an important win for American companies that rely on global manufacturing to deliver safe and affordable products. Unlawful tariffs make it harder for businesses like ours to compete and grow,” said Jay Foreman, CEO of toymaker Basic Fun!
“We are encouraged by the court’s recognition that these tariffs exceeded the President’s authority. This ruling brings needed clarity and stability for companies navigating global supply chains,” he said in a statement.
The Trump administration had argued that a serious balance-of-payments deficit existed in the form of a $1.2 trillion annual U.S. goods trade deficit and a current account deficit of 4% of GDP. But some economists and trade lawyers argue the U.S. is not on the cusp of a balance-of-payments crisis, making the new duties vulnerable to a legal challenge.
(Reporting by Dietrich Knauth; Editing by Chris Reese and Sonali Paul)
Photo: March 27, 2026, White House, Dc, United States: U.S. President Donald Trump speaks from the Truman Balcony overlooking the South Lawn of the White House in Washington, DC, on March 27, 2026. Trump is expected to announce new loan guarantees for farmers and food suppliers as part of an effort to support U.S. agricultural communities affected by the Iran war, tariffs, and challenging market conditions. (Credit Image: © Andrew Leyden/ZUMA Press Wire)
