A federal court on Thursday (local time) struck down new global tariffs imposed by US President Donald Trump after a major setback at the Supreme Court. In a 2-1 decision, a three-judge panel of the Court of International Trade in New York ruled that the 10% tariffs were illegal after a lawsuit brought by small businesses, according to the Associated Press.
The majority said Trump exceeded the authority Congress granted the president under the law, calling the tariffs “invalid” and “unauthorized.”
If the administration challenges Thursday’s ruling, as widely expected, the case would first go to the U.S. Court of Appeals for the Federal Circuit in Washington and could eventually go all the way to the Supreme Court.
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The dispute centers on temporary 10% global tariffs imposed by Donald Trump’s administration after the Supreme Court in February struck down broader double-digit tariffs imposed the previous year on nearly all countries. The latest tariffs imposed in February were enacted under Section 122 of the Trade Act of 1974 and are scheduled to take effect on July 24.
The court’s ruling directly blocked the collection of tariffs by three plaintiffs — the state of Washington and two businesses, spice company Burlap & Barrel and toy company Basic Fun! “It’s not clear” whether other businesses will have to continue paying the tariffs, said Jeffrey Schwab, director of litigation at the libertarian Liberty Justice Center, which represented both companies, the AP reported.
“Today we fought and we won and we are extremely excited,” Jay Foreman, CEO of Basic Fun!, told reporters Thursday.
The Supreme Court ruled on February 28 that the IEEPA did not authorize the tariffs. The U.S. Constitution gives Congress the power to set taxes, including tariffs, although lawmakers can delegate tariff authority to the president, the AP reported.
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what’s next
Jeffrey Schwab, senior counsel at the Liberty Justice Center, which represented the small businesses that filed one of the cases in trade court, said next steps will depend on how the administration responds and whether the U.S. Justice Department appeals, according to Bloomberg.
Jay Foreman, CEO of Basic Fun Inc., one of the companies suing, praised the decision on a call with reporters, saying it took “a lot of guts and chutzpah” for small businesses to get in on the act.
Foreman said his company has been paying the disputed tariffs almost daily since they went into effect and estimates they have paid more than $100,000 so far.
U.S. Customs collected roughly $8 billion in Section 122 tariffs in March alone, according to government data analyzed by the small business coalition We Pay the Tariffs, Bloomberg reported.
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“Today’s ruling is more positive news for the small businesses that have been crushed by these illegal taxes,” Dan Anthony, who leads the coalition, said in a statement after the sentencing. “The court should have gone further and blocked the collection of these tariffs during any appeal.”
The Trump administration has already begun looking for alternatives to the tariffs struck down by the Supreme Court in January, opening two investigations that could lead to new trade tariffs, the AP reported.
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The U.S. Trade Representative’s office is investigating whether 16 trading partners, including China, the European Union and Japan, are producing excess goods that are depressing prices and putting U.S. manufacturers at a disadvantage.
It separately examines whether 60 economies, from Nigeria to Norway and representing 99% of US imports, are doing enough to block goods made with forced labour.
(This is a developing story; check back later for updates)
(With input from agencies)
