A federal judicial panel has determined that the president acted outside the law when enacting a 10 percent tariff on the majority of imports to the United States. In a split decision, the Court of International Trade found that the administration relied on an older trade statute from the 1970s in a manner the court concluded was improper.
The duties in question were implemented in February after the Supreme Court had invalidated an earlier set of tariffs. While the court's ruling declares the newer 10 percent levy unlawful, the order explicitly bars collection only for small businesses and certain states that had filed legal challenges. The scope of the ruling beyond those challengers was not expanded in the decision.
How the administration will proceed is unclear at this time, though an appeal is widely expected. The court's determination increases the possibility that funds collected under the tariff may need to be returned. That prospect follows an ongoing refund process for about $166 billion that was collected under prior tariffs the Supreme Court deemed unlawful.
The timing of the decision coincides with preparations by the president to travel to China for discussions with leader Xi Jinping. Trade issues, including tariffs, are expected to be a significant element of those talks, and the court's finding could erode the president's negotiating leverage in those discussions.
The legal contest centers on statutory authority and the proper mechanism for imposing broad import levies. The court's split ruling stopped short of a blanket nationwide bar on collection, limiting its immediate practical relief to the parties that brought the suits. That partial relief leaves open questions about how revenue already collected will be handled for other businesses and jurisdictions that did not challenge the duties.
For now, the ruling represents another judicial setback for the administration's trade enforcement approach, and it signals continued litigation and administrative activity ahead as officials, affected businesses and state plaintiffs consider next steps.