Federal Trade Court Blocks Trump’s Backup Tariff Plan

A federal trade court blocked President Donald Trump’s second major global tariff plan on Thursday, months after the Supreme Court struck down the president’s ability to unilaterally impose tariffs under the International Economic Emergency Powers Act.

Following the Supreme Court’s 6-3 opinion in February that kneecapped Trump’s broad authority to pursue tariffs during national emergencies under the IEEPA, he immediately adopted an across-the-board global 10% tariff. Trump justified these new tariffs through Section 122 of the Trade Act of ⁠1974, but a group of small businesses challenged the duties.

The trade court panel ruled 2-1 in favor of the plaintiffs Thursday. The opinion cited Trump’s improper invocation of Section 122, which requires “fundamental international payments problems” or the need to “deal with large and serious United States balance-of-payments deficits,” among other conditions.

“The President’s Proclamation fails to assert that those required conditions have been satisfied,” the opinion stated.

The administration is likely to appeal the decision, which would place the case in front of the U.S. Court of Appeals for the Federal Circuit. From there, if appealed again, it would proceed to the Supreme Court.

New York Attorney General Letitia James, a longtime foe of the president, led this latest lawsuit alongside 21 other attorneys general and the governors of Kentucky and Pennsylvania.

“Once again, the courts have made clear that the president cannot unilaterally rewrite our trade laws to suit his political agenda. Limitless tariffs were unlawful the first time, and changing the label did not make them any less illegal the second time,” James said in a statement.

Trump introduced his first round of tariffs on April 2, 2025, in a Rose Garden event that he billed as “Liberation Day.”

He targeted multiple countries and territories with tariffs, including an 84% tariff on China and 50% tariffs on Lesotho and St. Pierre and Miquelon.

Trump said these tariffs would “make Americans wealthy,” but the Tax Foundation found that “data does not support claims of a large investment surge.” Trump even claimed the revenue from tariffs could serve as a replacement for income taxes.

The first lawsuit against Trump and his tariffs was brought by the New Civil Liberties Alliance, a nonprofit legal group, the day after “Liberation Day.”

The case made its way to the Supreme Court, which ultimately struck down Trump’s tariffs.

In the February opinion, Chief Justice John Roberts wrote: “The President asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope. In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorization to exercise it.”

Justices Clarence Thomas, Samuel Alito and Brett Kavanaugh dissented, warning that a tariff refund scheme the high court called for would wind up causing problems.

In all, the court determined that as much as $166 billion in refunds should go directly to importers that paid their duties.

“The interim effects of the Court’s decision could be substantial,” Kavanaugh wrote. “The United States may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others. As was acknowledged at oral argument, the refund process is likely to be a ‘mess.’”

The refunds are handled by the U.S. Customs and Border Protection. There is a portal where importers can request payments.

However, some lawmakers are worried that small businesses that were affected by Trump’s tariffs could get left behind in the tariff refund system.

“Small businesses do not have teams of legal and financial experts to submit their forms. Small businesses do not have the time to navigate this convoluted system,” Democratic Sen. Ed Markey said in a call with business owners in March. “Small businesses need their refunds, and they need them now.”

And consumers who paid higher prices won’t see any money directly.

Heather Boushey, who served on the White House Council of Economic Advisers under then-President Joe Biden, described the refund process as a “windfall for businesses” to The New York Times.

“American families are certainly the losers,” Boushey added.