President Donald Trump’s tariff policy in the United States has suffered a major setback. The US Federal Trade Court has struck down the new global import tariffs imposed by the Trump administration. The court stated that the Trump administration abused the limited powers granted to it under the 1974 Trade Act and attempted to impose a 10 percent import surcharge, going beyond the law.
🚨 The U.S. Court of International Trade struck down President Trump’s 10% global tariff on imported goods, holding he exceeded his authority under Section 122 of the Trade Act. pic.twitter.com/VXiCbt9TJ4
— SCOTUS Wire (@scotus_wire) May 7, 2026Why was the Trade Act law enacted?
The US Court of International Trade ruled in a 2-1 decision that the Trump administration cannot invoke Section 122 of the Trade Act of 1974 based on a widening trade deficit and current account deficit. According to the court, the law was designed to address the specific balance of payments crises of the 1970s, not the typical trade deficits of modern times.
What did Donald Trump fail to prove?
Judges Mark A. Barnett and Claire R. Kelly said in their ruling that Trump’s proclamation failed to prove that the statutory requirements were met. President Donald Trump imposed the tariffs in February.
What warning did the court give?
The court also warned that allowing the president such a broad interpretation would give him virtually unlimited power to impose tariffs. The court stated that doing so could raise constitutional questions, as the authority to set tariffs and trade policy primarily rests with Congress.
Trump’s old tariffs were struck down by the court
In fact, earlier this year, the US Supreme Court struck down Donald Trump’s previous tariffs, which he had implemented under the Emergency Powers Act. In February, Trump invoked Section 122, which allows the president to impose temporary import duties of up to 15 percent for a maximum of 150 days.
The Donald Trump administration claimed the move was necessary due to the US’s large trade deficit. However, the court ruled that the balance of payments crisis referred to in the law did not refer to the current trade deficit.
How did this matter come to light?
The case arose after a court challenge by two importing companies, Burlap & Barrel and the toy company Basic Fun, as well as the state of Washington. The court ruled in their favor, although petitions from some other Democratic states were dismissed on technical grounds.
Judge Timothy Stansew dissented, arguing that the court should not interfere with the president’s economic decisions and should not interpret the balance of payments too narrowly.
The decision is now likely to be challenged in the US Court of Appeals for the Federal Circuit, and the case could even reach the Supreme Court again. After the Supreme Court struck down the first tariffs, Trump expressed his displeasure at the White House, saying, “We’ll keep moving forward. We’ll be able to bring in more money.” Trump described Section 122 as one of the most powerful options available to him.
Political and legal debate on Trump intensifies
Meanwhile, political and legal debate has intensified over Trump’s use of executive powers. Many critics, even some Republican leaders, have argued that Congress, not the White House, has the constitutional authority to impose tariffs. Senate Republican leader Mitch McConnell has already stated that bypassing Congress and imposing tariffs through emergency powers is illegal.
Edited by: Bhoomi Goyal
