The court ruled in favor of small businesses that challenged the February tariffs.
Published May 7, 2026
The U.S. Trade Court has ruled against President Donald Trump’s latest 10% global tariff, ruling that the flat tariff is not justified under 1970s trade law.
The U.S. Court of International Trade ruled Thursday in favor of small businesses that challenged the tariffs, which went into effect on February 24. The ruling was 2-1, with one judge saying it was premature to award victory to the small business plaintiffs.
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Small businesses had argued the new tariffs were an attempt to circumvent a landmark U.S. Supreme Court ruling that invalidated the 2025 tariffs imposed by the Republican president under the International Emergency Economic Powers Act.
In a February executive order, President Trump invoked Section 122 of the Trade Act of 1974, which allows tariffs to be imposed for up to 150 days to correct a serious “balance of payments deficit” or avert an impending dollar weakness.
Thursday’s court ruling found the law was not an appropriate response to the type of trade deficit President Trump mentioned in his February order.
“This decision is an important victory for American companies that rely on global manufacturing to provide safe and affordable products. Unlawful tariffs make it difficult for companies like ours to compete and grow,” said Jay Foreman, CEO of toy maker Basic Fun!.
“We are encouraged by the court’s recognition that these tariffs exceeded the president’s authority,” he said in a statement. “This ruling brings much-needed clarity and stability to companies operating the world’s supply chains.”
The Trump administration has argued that the US has a serious balance of payments deficit, with an annual goods trade deficit of $1.2 trillion and a current account deficit of 4% of gross domestic product (GDP). But some economists and trade lawyers argue that the U.S. is not on the brink of a balance of payments crisis and that the new obligations are vulnerable to legal challenges.
