US Trade Court Rules Trump Section 122 Tariffs Unlawful

A U.S. trade court's ruling against a Trump administration tariff could further constrain the White House's ability to impose import levies, legal and trade experts said.

The Court of International Trade sided with 24 states and businesses that sued over the legality of a 10% global tariff President Trump imposed in February under Section 122 of the Trade Act of 1974. A three-judge panel ruled the temporary tariffs unlawful and harmful to businesses.

The decision follows a February Supreme Court ruling that struck down U.S. tariffs imposed last year under the International Emergency Economic Powers Act.

The U.S. government owes importers an estimated $175 billion in tariff refunds, plus interest. U.S. Customs and Border Protection has launched a portal for importers to submit refund claims.

White House spokesman Kush Desai defended Trump's use of tariffs. "President Trump has lawfully used the tariff authorities granted to him by Congress to address our balance of payments crisis," Desai said in a statement to CBS News. "The Trump administration is reviewing legal options and maintains confidence in ultimately prevailing."

Trump administration officials have called tariffs an important tool for ensuring fair trade relations with U.S. economic partners, defending critical U.S. industries and raising federal revenue.

The CIT ruling applies to a narrow subset of the plaintiffs — two businesses and the state of Washington — that sued over the Section 122 tariffs, said Blake Harden, a trade policy expert at Ernst & Young.

The ruling leaves the average effective U.S. tariff rate on imports at 7.2%, according to Capital Economics.

"Given the narrow nature of the CIT's ruling and the fact that Section 122 tariffs are due to expire at the end of July anyway, none of this has any immediate implication for the U.S. tariff rate," said Stephen Brown, chief North America economist at Capital Economics, in a research note.

The narrow scope means most U.S. businesses still owe the 10% tariff on most imported goods.

"They have to keep doing what they've been doing. If I am a business today, for practical purposes, nothing changes today compared to yesterday," Harden said. She expects the Trump administration to appeal swiftly.

Fox Rothschild trade attorney Lizbeth Levinson said the ruling does not universally strike down the Section 122 tariff, so more businesses could sue to avoid paying and seek refunds.

"They could come forward, depending on how much they've paid in duties, if it's economical for them to try to get their money back," she told CBS News.

U.S. importers should track any Section 122 duties they pay in case they become entitled to refunds, Harden advised. "They want to be prepared in case they do wind up with the ability to file for refunds."

Section 122 of the Trade Act of 1974 only allows the president to impose a temporary 10% duty for 150 days. Harden said the measure was intended as a stopgap rather than a permanent substitute for the illegal IEEPA duties.

The Trump administration in March announced investigations into foreign nations' trade practices under Section 301 of the Trade Act of 1974, which allows the Office of the U.S. Trade Representative to retaliate against countries engaging in unfair trade practices. The law requires the federal government to investigate a country's trade practices before imposing tariffs and other restrictions.

"This decision reinforces that 301 is the tool they are most likely to rely upon and have the best chance at a durable tariff regime," Harden said. "I think 301 is the name of the game for them moving forward."

The trade court's ruling could open the door to legal challenges to Section 301 tariffs. Brown wrote in his report: The decision "once again highlights the judicial pushback that the administration is likely to face when it tries to follow through with tariffs under its more recent Section 301 investigations against 60 countries. ... That raises the risk that the Trump administration will eventually fail in its efforts to fully replace the lost revenue from IEEPA tariffs."