US Court Cancels Trump's 10 Percent Import Tariff, Here's Why

WASHINGTON, KOMPAS.com - The United States Court of International Trade has once again shaken President Donald Trump’s tariff policies. This time, the court ruled that the universal 10 percent tariff imposed by Trump on nearly all global imports is legally invalid. The decision was issued by a three-judge panel from the United States Court of International Trade in New York on Thursday (7/5/2026) local time. The court stated that the Trump administration lacks sufficient legal basis to impose the 10 percent tariff under Section 122 of the Trade Act of 1974. That provision was actually designed for conditions of serious balance-of-payments deficits, not mere ordinary trade deficits. The tariff had previously been implemented by Trump in February 2026 after the US Supreme Court invalidated other broad tariffs imposed under the International Emergency Economic Powers Act (IEEPA). However, the move was again challenged by small business actors and several US states. In its ruling, the majority of judges assessed that the US government’s reasons regarding the trade deficit do not meet the legal requirements for applying tariffs under Section 122. According to the court, the government’s overly broad interpretation of the term “balance-of-payments deficit” could give the president nearly unlimited authority to impose tariffs at any time. However, the court only granted limited protection to the plaintiffs, namely the toy company Basic Fun!, spice importer Burlap & Barrel, and the State of Washington. This means that tariffs can still be collected from other importers during the appeals process. The court’s decision also did not grant the request from a coalition of 24 states, mostly led by the Democratic Party, to halt the tariffs entirely.