A U.S. trade court’s ruling against a Trump administration tariff could further constrain the White House’s ability to impose import levies, according to legal and trade experts.
The Court of International Trade (CIT) sided with 24 states and businesses that filed a lawsuit challenging the legality of a 10% global tariff imposed by President Trump in February under Section 122 of the Trade Act of 1974. In a ruling by the three-judge panel, the court found that the temporary tariffs were “unlawful” and harmful to businesses.
The blow to Mr. Trump’s trade policies follows a February Supreme Court ruling that struck down U.S. tariffs imposed last year under the International Emergency Economic Powers Act, or IEEPA.
The U.S. government owes importers an estimated $175 billion in tariff refunds, plus interest, because of the ruling. U.S. Customs and Border Protection has since launched a portal where importers can submit refund claims.
White House spokesman Kush Desai defended Mr. Trump’s use of tariffs. “President Trump has lawfully used the tariff authorities granted to him by Congress to address our balance of payments crisis,” Desai said in a statement to CBS News. “The Trump administration is reviewing legal options and maintains confidence in ultimately prevailing.”
Trump administration officials have said tariffs are an important tool for ensuring fair trade relations with U.S. economic partners, defending critical U.S. industries and raising federal revenue.
Here’s what to know about the latest court ruling rolling back the Trump administration’s tariffs.
What’s the status of Trump’s 10% global tariff?
The CIT ruling applies to a narrow subset of the plaintiffs — two businesses and the state of Washington — that sued the Trump administration over the Sec. 122 tariffs, Ernst & Young trade policy expert Blake Harden explained.
The ruling leaves the average effective U.S. tariff rate on imports at 7.2%, according to Capital Economics.
“Given the narrow nature of the CIT’s ruling and the fact that Section 122 tariffs are due to expire at the end of July anyway, none of this has any immediate implication for the U.S. tariff rate,” Stephen Brown, chief North America economist at the investment advisory firm, said in a research note.
What does it mean for businesses?
The narrow scope of the court’s ruling means most U.S. businesses still owe the 10% tariff on most imported goods.
“They have to keep doing what they’ve been doing. If I am a business today, for practical purposes, nothing changes today compared to yesterday,” Harden said, noting that she expects the Trump administration to appeal the ruling “very swiftly.”
Fox Rothschild trade attorney Lizbeth Levinson said that, because the ruling does not universally strike down the Section 122 tariff, more businesses could sue to avoid paying the tariffs and potentially seek refunds.
“They could come forward, depending on how much they’ve paid in duties, if it’s economical for them to try to get their money back,” she told CBS News.
U.S. importers should still track any Section 122 duties they pay in case they are eventually entitled to tariff refunds, Harden advised. “They want to be prepared in case they do wind up with the ability to file for refunds.”
What could Trump do next?
Section 122 of the Trade Act of 1974 only allows the president to impose a temporary 10% duty for 150 days. Harden said the trade measure was intended as a stopgap rather than a permanent substitute for the White House’s illegal IEEPA duties.
The Trump administration in March announced investigations into foreign nations’ trade practices under Section 301 of the Trade Act of 1974, which allows the Office of the U.S. Trade Representative to unilaterally retaliate against countries engaging in unfair trade practices.
The law also requires the federal government to first investigate a country’s trade practices before it can impose tariffs and other trade restrictions.
“This decision reinforces that 301 is the tool they are most likely to rely upon and have the best chance at a durable tariff regime,” Harden said. “I think 301 is the name of the game for them moving forward.”
Still, the trade court’s latest ruling could open the door to legal challenges to Section 301 tariffs. Said Brown in his report: The decision “once again highlights the judicial pushback that the administration is likely to face when it tries to follow through with tariffs under its more recent Section 301 investigations against 60 countries. … That raises the risk that the Trump administration will eventually fail in its efforts to fully replace the lost revenue from IEEPA tariffs.”
