In a landmark ruling that threatens to upend President Donald Trump’s trade agenda, the United States Court of International Trade on Thursday struck down the administration’s 10 percent global tariff, finding that across-the-board duties were not justified under a 1970s trade law. The 2-1 decision represents the most significant legal check on Trump’s tariff authority since the Supreme Court’s landmark ruling last year.
The ruling, which came in response to a challenge brought by small businesses, found that Section 122 of the Trade Act of 1974 — the legal basis Trump invoked for the February 24 tariffs — was not an appropriate mechanism for addressing the kinds of trade deficits cited in the president’s executive order. The law permits temporary duties of up to 150 days to correct serious “balance of payments deficits” or prevent an imminent depreciation of the dollar, but the court determined that the administration had stretched the statute beyond its intended purpose.
A Legal Watershed
The decision marks the second major judicial rebuke of Trump’s tariff policy in just over a year. In 2025, the Supreme Court struck down the president’s earlier tariffs imposed under the International Emergency Economic Powers Act (IEEPA), ruling that the law did not grant the president unlimited authority to impose sweeping trade barriers. Thursday’s ruling addressed the administration’s subsequent attempt to revive similar tariffs under different legal authority.
“The small businesses that brought this challenge argued that the new tariffs were an attempt to sidestep the Supreme Court’s ruling,” said legal analyst Sarah Chen of the Peterson Institute for International Economics. “The court agreed, finding that the administration could not simply swap one legal theory for another to achieve the same result.”
The dissenting judge in the 2-1 ruling argued that it was premature to grant victory to the plaintiffs, suggesting that the legal process should have been allowed to play out further before the court intervened.
Trump’s EU Ultimatum
Even as the court ruling landed, Trump escalated his trade confrontation with Europe, announcing a new deadline for the European Union to implement trade deal commitments or face dramatically higher tariffs. In a Truth Social post, the president said he had given the EU until July 4 to comply with the terms of a deal struck in Scotland last July, warning that failure to do so would result in tariffs on EU goods, including automobiles, being raised to “much higher levels.”
The Scotland agreement, brokered during a summit between Trump and European Commission President Ursula von der Leyen, called for the EU to cut tariffs on US industrial goods to zero and provide duty-free quotas on certain American farm and seafood products. However, implementing legislation has moved slowly through the European Parliament, with some member states expressing reservations about the deal’s impact on domestic industries.
Last Friday, Trump surprised markets by announcing he would raise tariffs on EU vehicles to 25 percent from the previously agreed 15 percent, citing non-compliance with the deal’s terms. Thursday’s new deadline adds further uncertainty for European automakers and exporters already grappling with the economic fallout of the Iran war and global supply chain disruptions.
In his Truth Social post, Trump noted that he had a “great call” with von der Leyen, during which the two leaders also agreed that Iran could never possess a nuclear weapon — a rare point of consensus amid otherwise strained transatlantic relations.
Economic Fallout
The trade court ruling comes at a precarious moment for the global economy. The ongoing Iran war has sent oil prices soaring, with JPMorgan Chase analysts estimating that OECD oil inventories could begin running out between May 9 and May 30. The combination of tariff uncertainty and energy market instability has created what economists describe as a “stagflationary shock” — rising prices coupled with slowing growth.
Spirit Airlines became the most high-profile corporate casualty of the economic turmoil, ceasing operations on May 2 following a failed government bailout deal and the surge in oil prices. The airline’s collapse, which stranded thousands of passengers and eliminated thousands of jobs, has been cited by critics as evidence that Trump’s tariff policies are compounding the economic damage from the Iran war rather than protecting American workers.
“The administration’s trade policy is creating uncertainty that is paralyzing business investment,” said economist Maria Torres of the Brookings Institution. “Companies cannot plan for the future when tariff rates are changing by the week and the legal foundation for those tariffs is being rejected by the courts.”
What Comes Next
The Trump administration is expected to appeal Thursday’s ruling, potentially setting up another Supreme Court confrontation over the scope of presidential tariff authority. Legal experts say the appeal could reach the high court within months, though the timeline remains uncertain.
In the meantime, the ruling creates immediate practical questions. If the tariffs are invalidated, importers who have been paying the 10 percent surcharge since February could seek refunds — potentially costing the federal government billions of dollars. The Court of International Trade has not yet issued an order on remedy, and the administration may seek a stay pending appeal.
For small businesses — the plaintiffs in the case — the ruling offers a measure of relief after months of uncertainty. Many reported that the tariffs had forced them to raise prices, reduce inventory, or absorb losses that threatened their viability.
“This is a victory for the rule of law and for American small businesses who have been caught in the crossfire of a trade war they never asked for,” said Jonathan Miller, attorney for the plaintiffs. “The administration tried to bypass Congress and the courts to impose taxes on the American people. Today, the courts said no.”
The White House did not immediately comment on the ruling, but Trump’s Truth Social post suggesting a July 4 deadline for the EU indicates the administration is not backing down from its confrontational trade posture. With the Iran war straining global energy markets and the US economy showing signs of cooling, the trade court ruling adds another layer of complexity to an already volatile economic landscape.
As the legal battle moves forward, businesses on both sides of the Atlantic are left to navigate an increasingly unpredictable trade environment — one where tariffs can be imposed, struck down, and reimposed in rapid succession, leaving little certainty for those trying to plan for the months ahead.
