A major legal setback has emerged for Donald Trump after the United States Court of International Trade ruled that the Trump administration’s 10 percent universal tariff on global imports was unlawful.
The New York-based trade court, in a 2-1 decision, stated that the administration failed to meet the legal conditions required under Section 122 of the Trade Act of 1974 before imposing the tariffs.
The ruling creates fresh uncertainty for businesses and exporters worldwide, including those in India, as the Trump administration prepares to challenge the verdict through an appeal.
Tariffs Were Imposed After Earlier Supreme Court Setback
The disputed tariffs were introduced earlier this year after the Supreme Court of the United States blocked Trump’s attempt to impose global reciprocal tariffs using the International Emergency Economic Powers Act (IEEPA).
Following that setback, the administration invoked Section 122 of the Trade Act of 1974, which allows temporary tariffs to address serious balance-of-payments deficits in the United States.
Under this provision, the Trump administration imposed a blanket 10 percent tariff on imports from countries around the world, including India.
Court Says Legal Requirements Were Not Met
In its judgment, the trade court stated that the President’s proclamation did not sufficiently establish the economic conditions required under Section 122.
According to the ruling, the administration failed to demonstrate the existence of the statutory conditions necessary to lawfully impose the import surcharges.
The decision means the tariffs remain under legal scrutiny even as the administration continues efforts to defend its trade measures.
Experts Say Trump Administration May Shift to Section 301 Tariffs
Trade experts believe the ruling is a significant setback for Trump’s tariff strategy but may not prevent the administration from pursuing alternative trade measures.
According to former US trade officials, the White House is already preparing to use Section 301 of the Trade Act of 1974 to impose new tariffs on countries accused of unfair trade practices.
Mark Linscott said the administration is expected to rely on Section 301 investigations to replace earlier tariffs and maintain leverage in ongoing trade negotiations, including discussions involving India.
India Among Countries Facing US Trade Investigations
In March, the Trump administration launched Section 301 investigations into 16 major economies, including India, alleging unfair manufacturing and trade practices.
Public hearings linked to these investigations are scheduled this week, and the US government is expected to use the findings to justify a fresh wave of tariffs later this year.
Experts believe the administration may continue legal appeals to keep the current tariffs in place until replacement measures are finalized.
Analysts Expect More Cautious US Tariff Strategy
Kurt Tong, a former US diplomat and trade expert, said the second major court defeat could force US trade officials to adopt a more cautious legal strategy while designing future tariffs.
According to Tong, businesses may increasingly challenge tariff decisions in US trade courts, particularly if future measures are based on controversial grounds such as overcapacity or forced labor allegations.
He also noted that the current Section 122 tariffs are expected to expire on July 24, after which courts may determine whether previously collected duties should be refunded.
Global Businesses Closely Watching US Trade Policy
The ruling has added fresh uncertainty to global trade policy and international supply chains, especially for exporters dependent on the US market.
Businesses and governments across multiple countries are now closely monitoring how the Trump administration responds to the court setback and whether new tariff measures will replace the existing framework.
