A US federal trade court on 8 May struck down President Donald Trump's latest global tariff move, ruling in a 2-1 decision that the administration exceeded its authority under a 1974 trade law by attempting to impose a 10% import surcharge on goods entering the United States. The ruling marks the second major judicial blow to Trump's tariff agenda in 2025.

What the Court Ruled

The US Court of International Trade held that the Trump administration could not rely on broad trade and current account deficits to justify the tariffs under Section 122 of the Trade Act of 1974. The court found that the law was specifically designed to address "balance-of-payments" crises tied to the international monetary system of the 1970s — not modern trade deficits of the kind the administration cited.

Judges Mark A. Barnett and Claire R. Kelly wrote that Trump's proclamation "fails to assert that those required conditions have been satisfied." The majority further warned that accepting such a broad interpretation would effectively hand presidents unlimited tariff authority, noting: "Such an expansive reading of the statute would raise a non-delegation issue, which in turn would prompt a constitutional question."

Background: A Second Tariff Defeat

Trump imposed the new tariffs in February 2025 after the Supreme Court earlier struck down his previous tariff regime, which had been issued under the International Emergency Economic Powers Act (IEEPA). Following that ruling, Trump publicly lashed out at the justices from the White House briefing room, declaring: "We're going forward. We will be able to take in more money." He had described Section 122 — which permits temporary import surcharges of up to 15% for 150 days — as one of several "very powerful alternatives" at his disposal.

The latest ruling, however, found that his proclamation relied on current account deficits and a "large and serious trade deficit" rather than the narrower balance-of-payments standard Congress intended in 1974.

Who Brought the Case

The decision sided with two importers — spice company Burlap and Barrel and toy firm Basic Fun — as well as the State of Washington. Claims from several other Democratic-led states were dismissed for lack of legal standing. Judge Timothy Stanceu dissented, arguing the court should not second-guess the President's economic judgment or narrowly define how balance-of-payments deficits are measured.

Political and Legal Fallout

The ruling intensifies growing legal and political scrutiny of Trump's use of executive authority on trade. Critics — including some within the Republican Party — have long argued that Congress, not the White House, holds constitutional authority over tariffs. Senate Republican leader Mitch McConnell had previously stated that using emergency authorities "to circumvent Congress in the imposition of tariffs" was illegal.

What Happens Next

The ruling is widely expected to be appealed to the US Court of Appeals for the Federal Circuit and could ultimately return to the Supreme Court. With two consecutive tariff regimes now blocked by the judiciary, the administration faces mounting pressure to either seek congressional authorisation or devise a legally defensible trade framework.