A federal trade court ruled Thursday that President Donald Trump's across-the-board 10 percent global tariffs are unlawful, the second time a court has found his tariff regime to be illegal.
A three-judge panel on the Court of International Trade voted 2-1 that the Trump administration misread the law it used to justify the tariffs. The Department of Justice filed a notice of appeal the following day at the same court, signaling plans to challenge the decision at the United States Court of Appeals for the Federal Circuit in Washington, D.C.
The legal dispute turned on a single phrase in the Trade Act of 1974: "balance-of-payments deficits." The Trump administration argued that phrase was equivalent to a "trade deficit," which the court rejected. "It is clear that Congress was aware of the differences in the words it chose," the majority wrote.
The judges acknowledged that the term "causes some confusion" but held that the administration's reading was wrong. Congress in 1974, the majority noted, had identified the "settlement, liquidity, and basic balance deficits" as the proper components of a balance-of-payments deficit, not the current account figure the government relied on.
The ruling's immediate practical effect is limited. The court granted an injunction protecting two small businesses and the state of Washington, but dismissed claims brought by a larger coalition of states on standing grounds. The global 10 percent tariff took effect in February and is set to expire by statute in late July, and it remains unclear whether the Federal Circuit will rule before that deadline.
The Supreme Court earlier this year affirmed a separate Court of International Trade decision blocking Trump's first round of tariffs, making Thursday's ruling the latest in a series of legal setbacks for the administration's trade agenda.
