A federal panel has declared the 10% global tariffs enacted under former President Trump unlawful, citing a misinterpretation of key legal terms in trade legislation. The decision by the Court of International Trade hinges on the administration’s use of the term “balance-of-payments deficits” to justify the tariffs.
The court’s majority clarified that the Trump administration incorrectly equated “balance-of-payments deficits” with the more commonly understood “trade deficit.” According to the judges, Congress distinguished between these terms in the Trade Act of 1974, referring specifically to “settlement, liquidity, and basic balance deficits” as the proper legal benchmarks. This nuanced difference undercut the legal basis for the tariffs, which were implemented globally and set to expire later this year.
The ruling specifically granted an injunction benefiting two small businesses and the state of Washington, while dismissing claims from a larger group of states due to lack of legal standing. This decision follows a previous Supreme Court ruling earlier this year striking down the initial rounds of tariff increases on similar grounds.
The Department of Justice quickly filed an appeal with the U.S. Court of Appeals for the Federal Circuit, signaling its intent to challenge the decision. However, the timing remains uncertain as the 10% tariff levy is scheduled to expire by the end of July. Whether the appeals court will issue a meaningful ruling before that deadline remains unclear.
Trump’s global tariffs, which took effect in February 2026, aimed at protecting domestic industries, have now faced repeated setbacks in the courts. This legal contest highlights ongoing tensions over trade policy and the extent of executive power in imposing tariffs under legacy trade laws from the 1970s.