A US trade court ruled against Trump's 10% global tariff.
The court said the US faces a trade deficit, not a balance-of-payments crisis.
The ruling may trigger refunds, though Trump is expected to appeal.
A US trade court on Thursday, May 7, handed President Donald Trump another legal defeat on his tariff agenda. In a 2-1 ruling, the US Court of International Trade found that Trump's 10% global tariff, imposed earlier this year, was not legally justified under the law used to enforce it.
For now, the ruling blocks the tariff only against two companies and the state of Washington.
1 May 2026
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The tariff in question was introduced by the Trump administration in February, shortly after the US Supreme Court had already struck down several of his earlier global duties. The new levy was imposed under Section 122 of the Trade Act of 1974, a Cold War-era law originally designed to address balance-of-payments crises, situations where a country runs short of foreign currency or gold reserves.
The court ruled that the United States does not face such a crisis. "The United States has a trade deficit, not a balance-of-payments deficit," said Jeffrey Schwab, senior counsel at the Liberty Justice Center, as quoted by AFP.
A Temporary Tariff With Shrinking Window
The 10% duty was always meant to be short-lived, set to expire in late July unless extended by Congress. However, the Trump administration has been simultaneously pursuing fresh investigations into dozens of trading partners over issues such as forced labour and industrial overcapacity, signalling intent to rebuild its trade agenda through other legal routes.
India had been among the countries hit hardest by US tariff measures, facing a 25% base duty plus an additional 25% penalty linked to its purchases of Russian crude oil.
A temporary India-US trade arrangement later brought the effective rate down to 18%, before the Supreme Court struck down those measures as well.
Refunds on the Table
The court ordered that the ruling be implemented within five days and that the companies involved receive refunds. US Customs and Border Protection estimated in March that over 330,000 importers could be eligible for refunds following the Supreme Court's earlier decision, a figure that may now grow.
The Trump administration is widely expected to appeal Thursday's ruling. Sector-specific tariffs on steel, aluminium and automobiles remain in place and are unaffected by these legal challenges.
