US court deals fresh blow to Trump's 10% global tariff policy

Lead

A US trade court has ruled that President Donald Trump's 10% global tariffs are unlawful, dealing another legal setback to his trade policy. However, the decision applies only to a small group of plaintiffs, leaving the tariffs in place for most importers while the administration appeals.

The US Court of International Trade, in a 2-1 ruling on May 7, found that the tariffs imposed under Section 122 of the Trade Act of 1974 were not justified. The court said the Trump administration failed to meet the legal standards required under the 1970s law, which allows temporary duties to address serious balance-of-payments deficits or prevent an imminent depreciation of the dollar.

Coverage comparison

The ruling was widely reported across international media, with most outlets highlighting the court's finding that the tariffs were unlawful. ABC Australia noted that the court found the administration lacked justification under the 1970s law, while Deutsche Welle described the decision as a "fresh blow" to Trump's tariff strategy. France 24 emphasised that the tariffs were ruled unjustified and noted they are set to expire in July.

Al Jazeera reported that a federal appeals court had temporarily paused a lower court decision to block the tariffs, a development that came after the initial ruling. The Hindu also covered this pause, reporting that the US Court of Appeals for the Federal Circuit issued an administrative stay on the lower court's order.

South China Morning Post focused on Trump's appeal, reporting that the president filed an appeal on Friday after the legal setback. The outlet noted that the court found Trump failed to meet the "large and serious" trade deficit test required under the 1974 statute.

Key claims

The tariffs, which took effect on February 24, were imposed under Section 122 of the Trade Act of 1974. This law allows the president to impose import surcharges of up to 15% for up to 150 days to address serious external trade and financial imbalances.

A coalition of 24 states argued that the tariffs did not meet the standards of the 1974 Trade Act. The court agreed, ruling that the tariffs were "invalid" and "unauthorised by law" for the plaintiffs.

However, the court's decision provided relief only to the plaintiffs in the case: two companies (spice importer Burlap & Barrel and toy maker Basic Fun!) and the state of Washington. The tariffs remain in place for all other importers.

The ruling came after the US Supreme Court struck down another set of tariffs imposed by Trump using the International Emergency Economic Powers Act (IEEPA). The Supreme Court concluded that Trump overstepped his authority by using that law to impose sweeping tariffs.

The tariffs under Section 122 are set to expire in late July, unless extended by Congress. The Trump administration has said it is pursuing other means to impose more durable tariffs, including investigations into trading partners over forced labour and overcapacity concerns.

In a related development, consumers have filed a class action lawsuit against Amazon, alleging the e-commerce giant collected hundreds of millions of dollars in unlawful tariff costs by raising prices on imported goods before the Supreme Court ruled. The lawsuit asserts claims of unjust enrichment and violation of Washington state's consumer-protection law.

Perspectives

Trump administration: President Trump criticised the trade court decision, blaming "two radical left judges" and saying "nothing surprises me with the courts." The administration has appealed the ruling and is seeking to replace the tariffs with other legal authorities.

Plaintiffs and supporters: The small businesses that challenged the tariffs welcomed the ruling. Jay Foreman, CEO of Basic Fun!, said the decision was "an important win for American companies that rely on global manufacturing to deliver safe and affordable products." Jeffrey Schwab, senior counsel at the Liberty Justice Center, argued that the United States has a trade deficit, not a balance-of-payments deficit, and does not have an international payments problem.

Legal experts: Peter E. Harrell, visiting scholar at Georgetown Law School's Institute of International Economic Law, noted that the court did not issue a universal injunction, meaning other companies may now decide to sue.

The Trump administration also said that if it issued refunds on the 10% tariff and an appeals court later upheld its position, it would be unable to pursue economic redress. The government argued that plaintiffs could be made whole through refunds if the tariffs were ultimately held unlawful.