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The ruling has the potential to set off a tsunami of further lawsuits.
In February, the US Supreme Court ruled that US President Donald Trump’s sweeping global tariffs were an overstepping of the president’s powers.
The decision meant that the US had to pay back $166 billion in tariffs to companies all over the world.
Shortly after the Supreme Court’s decision, however, Donald Trump announced a 10% global tariff, invoking a different set of rules than those struck down by the Supreme Court.
But the Court of International Trade in New York has now ruled that this is another case of the president overstepping his powers — and the ruling could have widespread consequences.
A major legal blow
Small businesses had sued the Trump administration over the global 10% tariffs, and judges ruled that the administration cannot enforce the global import taxes, the Associated Press reported.
A three-judge panel at the Court of International Trade split in its decision. Two judges concluded that the president overstepped the boundaries set by Congress.
According to AP, the judges described the 10% tariffs as “invalid” and “unauthorized by law”. The third judge disagreed, arguing that the law grants the president more room to maneuver.
Trump had invoked Section 122 of the Trade Act of 1974, which authorizes the US president to impose import duties or surcharges “[w]henever fundamental international payments problems require special import measures to restrict imports (1) to deal with large and serious United States balance-of-payments deficits, (2) to prevent an imminent and significant depreciation of the dollar in foreign exchange markets, or (3) to cooperate with other countries in correcting an international balance-of-payments disequilibrium,” according to Congress.gov.
Toys and spices
The ruling serves as a direct win for three specific challengers. The state of Washington filed suit alongside a spice brand named Burlap & Barrel and a toy maker called Basic Fun!.
The government cannot collect the taxes from these groups at the moment. “We fought back today and we won, and we’re extremely excited,” Basic Fun! chief executive Jay Foreman told reporters, according to the Associated Press.
It remains to be seen how this will affect the broader market. Jeffrey Schwab from the Liberty Justice Center told the press that “it’s not clear” whether other companies will still face the charges.
Finding another way
The administration applied these temporary tariffs under a 1974 trade law. They were intended as a backup plan and are set to expire in July.
Trade experts believe the latest ruling will encourage more widespread pushback. Dave Townsend, a lawyer at Dorsey & Whitney, predicted a wave of new legal action.
“Other importers likely will now ask for a broader remedy that applies to more companies,” Townsend said in a statement picked up by news agencies.
The fight continues
Experts expect the government to appeal. That move would send the fight to a federal court in Washington, and potentially back to the Supreme Court.
Meanwhile, the White House is already looking for alternative routes. Behind closed doors, the administration has launched two new trade investigations to maintain pressure.
One probe targets sixteen trading partners over unfair pricing. Another focuses on forced labor across sixty different economies, covering almost all imports into the United States.
Sources: Reuters, Associated Press, Congress.gov
