A federal trade court dealt a significant blow to Donald Trump’s trade agenda on Thursday, striking down a sweeping set of global tariffs and underscoring the limits of presidential authority when it comes to economic policy.
In a 2-1 decision, a panel of judges ruled that the Trump administration’s 10 percent tariffs on most U.S. imports could not stand under the legal justification provided. The court found that the administration had improperly relied on a provision of the Trade Act of 1974, concluding that the law did not support the broad use of tariffs in this case.
The tariffs, first implemented on February 20, were framed by the administration as a necessary step to address economic imbalances. After an earlier setback at the hands of the Supreme Court, the White House attempted to revive the policy using Section 122 of the same 1974 law. Officials argued that the provision allowed for tariffs of up to 15 percent for a limited period—150 days—to counter what they described as “balance-of-payments deficits.”
But the court was not persuaded. Judges determined that the administration had overstepped by invoking the statute in a way that exceeded its intended scope. The ruling effectively blocks the tariffs and reinforces a prior Supreme Court decision that had already found Trump’s 2025 global tariffs were not authorized under the International Emergency Economic Powers Act.
The outcome is seen as a win for small businesses, many of which had challenged the tariffs in court. These businesses argued that the administration was attempting to sidestep the Supreme Court’s earlier ruling by relying on a different legal pathway. The court’s decision suggests that such maneuvering will face significant scrutiny moving forward.
The financial implications are substantial. Roughly $166 billion collected during the initial round of tariffs is now slated for refund. If future rulings continue to go against the administration, Trump could be required to return additional funds collected since February, further complicating the economic picture.
Trump responded forcefully to the earlier Supreme Court ruling in an April post on Truth Social, expressing frustration with what he described as a narrow legal defeat. He argued that the Court had acknowledged his authority to impose tariffs but insisted he must do so through a different mechanism. According to Trump, the decision hinged on a slim margin, with the outcome determined by just two votes.
“They said I can charge tariffs, but I have to do it a different way,” Trump wrote, emphasizing that the ruling could result in the government having to repay more than $160 billion. He suggested that a minor adjustment in the Court’s language could have prevented the need for refunds, arguing that tariffs already collected should not have been subject to repayment.
While Trump maintained confidence that his administration would ultimately pursue a revised approach to tariffs, the court’s latest ruling raises broader concerns about the durability of aggressive trade measures enacted without clear statutory backing.
The decision also highlights a recurring tension in Washington: the push to act decisively on economic issues versus the constitutional and legal guardrails designed to limit executive overreach. As policymakers debate how best to protect American industries and workers, the courts are making clear that even well-intentioned efforts must operate within established law.
At the same time, the dispute serves as a reminder that large-scale economic interventions—often framed as necessary tools in global competition—can carry significant downstream consequences, not just for governments but for businesses and taxpayers alike.
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