Trade court rules against Trump's global tariff

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The U.S. Court of International Trade dealt a blow to the 10 percent global import tax that President Donald Trump imposed after losing on tariffs at the Supreme Court.

Trade court rules against Trump’s global tariff

www.washingtonpost.com/business/202...

— Brooklynwatch (@brooklynwatch.bsky.social) 2026-05-07T22:13:50.375Z

https://www.washingtonpost.com/business/2026/05/07/tariffs-trade-court-ruling-trump

A specialized federal court in New York delivered a new blow to President Donald Trump’s effort to impose widespread tariffs, ruling against the levies the president imposed after the February Supreme Court decision that eliminated most of his emergency import taxes.

Thursday’s ruling by a two-judge panel of the U.S. Court of International Trade held that the president’s order imposing a 10 percent global tariff under Section 122 of a 1974 trade law was invalid. Trump cited the nation’s trade deficit as justification for his latest tariffs. But under the law the president cited, the United States must be suffering “large and serious” balance-of-payments deficits, which the court said was not the case.

The court granted a summary judgment in favor of the plaintiffs, Burlap & Barrel, a New York-based online spice retailer, and Basic Fun!, a toy company in Florida, as well as Washington state.

The Section 122 tariffs were scheduled to expire in late July. The Trump administration has said it planned to replace them with permanent import taxes using different legal authorities.

This was not a close decision. These tariffs only apply with there is a balance payment deficit which can not happen since the US went off the gold standard

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1. Why Trump's Section 122 Tariffs Are Illegal

trump's new replacement tariffs are illegal. These tariffs can only be used when there is a balance-of-payments deficit which is very different from a balance of trade deficit. Since the US is no longer on a currency fixed exchange rate there have not been any balance of payment deficits for a couple of decades. These tariffs will be challenged and trump will lose again

Fascinating National Review post on Trump's latest Tariff gambit. Archive link here (it's pay walled, please don't give them money lol)

archive.is/r4Xdf

— Rude Law Dog (@esghound.com) 2026-02-21T19:01:57.437Z

https://www.nationalreview.com/corner/trumps-section-122-tariffs-are-illegal/

In Section 122, Congress endowed the president with narrow, temporary authority to impose tariffs “to deal with large and serious United States balance-of-payments deficits” (emphasis added). What Trump is complaining about — something he insists is a crisis but is not — is the balance of trade, not of payments. The United States does not have an overall balance of payments deficit, much less a large and serious one.

A trade deficit between the U.S. and a foreign nation occurs, mainly in connection with goods (which is just one aspect of international commerce), when imports are greater than exports. This is not really a problem for a variety of reasons — e.g., a trade deficit results in an investment surplus, the U.S. is a major services economy and often runs exported services surpluses that mitigate the imports deficit in goods, etc.

The balance of payments is a broader concept than the balance of trade. It accounts for all the economic transactions that take place between the United States and the rest of the world. Even without getting into every kind of transaction that entails, suffice it to say that foreign investment in the United States, coupled with the advantages our nation accrues because the dollar is the world’s reserve currency, more than make up for the longstanding trade deficit in goods.

Our overall payments are in balance. There is no crisis.

It’s vital to understand why Section 122 was enacted. There was a financial crisis in the late 60s and early 70s under the Bretton Woods system, when the dollar was tied to gold. Foreign countries that held dollar reserves could exchange them for gold at a fixed rate. Meanwhile, our government was spending at a high clip due to the Vietnam War and Great Society programs. This and the obligation to pay out gold put enormous pressure on the dollar. In response, in 1971, President Nixon severed the dollar’s tie to gold and — as several justices recounted in Friday’s Learning Resources opinions — imposed a temporary 10 percent import surcharge (a tariff) to stabilize the economy......

There is no rationale under Section 122 to impose tariffs. Because President Trump has no unilateral authority to order tariffs, he must meet the preconditions of Section 122 to justify levying them. He cannot. Not even close.