Why did the U.S. Court of International Trade block the 10% import surcharge?

The U.S. Court of International Trade ruled that the Trump administration failed to satisfy the legal requirements under Section 122 of the Trade Act of 1974. The court found that the proclamation stretched the meaning of “balance-of-payments deficits” beyond what Congress originally intended.

What was the purpose of the 10% import surcharge?

The surcharge was introduced as a temporary trade measure under Section 122 of the Trade Act of 1974 after the U.S. Supreme Court ruled that President Trump lacked authority under the IEEPA to impose country-specific tariffs in 2025.

Which parties challenged the Presidential Proclamation?

Several U.S. states led by Oregon, along with private importers including Burlap & Barrel and Basic Fun, challenged the legality of the proclamation, arguing that the administration exceeded its authority.

Why were some states dismissed from the case?

The court dismissed Oregon and several non-importing states because their claims were based on indirect economic harm, which the CIT considered too speculative to establish legal standing.

What does Section 122 of the Trade Act of 1974 allow the President to do?

Section 122 gives the President temporary authority to impose import restrictions or surcharges when the United States faces serious balance-of-payments difficulties. The court emphasized that this authority is limited to specific economic conditions defined by Congress.

What does the CIT ruling mean for U.S. importers?

The decision removes the immediate financial burden of the 10% import surcharge and provides businesses with greater certainty about the limits of presidential trade powers unless the ruling is overturned on appeal.

Trump Import Surcharge Blocked by U.S. Trade Court

The U.S. Court of International Trade (CIT) issued a major ruling concerning the enforcement of the Presidential Proclamation under which President Trump introduced a temporary 10% import surcharge on goods entering the U.S. The surcharge was imposed under Section 122 of the Trade Act of 1974, as a response to the U.S. Supreme Court ruling that President Trump lacked authority under the IEEPA to impose the country-specific tariffs in 2025.

Overview of the Case and the CIT's Decision

The case arose after several U.S. states, led by Oregon, together with private importers such as Burlap & Barrel, challenged the legality of the Presidential Proclamation. Together, they argued that the Trump administration had exceeded the authority granted by Congress. More specifically, they claimed that the economic conditions required under Section 122 were not properly established and that the surcharge effectively functioned as a broad tariff measure without sufficient statutory justification.

Firstly, the CIT devoted significant attention to the issue of standing before reaching the substance of the dispute. After carefully examining all the facts, the CIT ruled that several “Importer Plaintiffs,” including the State of Washington, Burlap & Barrel, and Basic Fun, had demonstrated a sufficiently direct and immediate financial injury to challenge the proclamation. In contrast, Oregon and several other non-importing states were dismissed for lack of standing, as their claims of indirect economic harm were too speculative.

At the center of the dispute was the meaning of the phrase “balance-of-payments deficits” in Section 122 of the Trade Act of 1974, which gives the President temporary authority to impose import restrictions or surcharges when the U.S. faces serious international payments difficulties. However, the plaintiffs argued that the Proclamation improperly stretched the meaning of this term beyond what Congress intended, effectively allowing the executive branch to use Section 122 as a broad trade policy tool.

After reviewing Section 122’s legislative history and the economic context in which it was enacted in 1975, the CIT found that Congress defined “balance-of-payments deficits” using traditional Bretton Woods metrics, referring specifically to deficits measured through liquidity, official settlements, or the basic balance of international payments. Moreover, Congress tied presidential authority to these specific economic concepts and had not intended to create a flexible or open-ended power.

As a result, the CIT found there was no genuine dispute of material fact requiring a trial and issued a permanent injunction preventing the government from implementing or enforcing the surcharge. The decision effectively nullified the proclamation unless overturned on appeal.

Conclusion

The decision reinforces judicial limits on presidential trade powers and clarifies that emergency or temporary trade authorities cannot be used without meeting clear statutory conditions. For businesses, and particularly importers, the decision removes the immediate financial burden of the 10% surcharge and provides greater certainty regarding the limits of executive trade measures.

Source: Court of International Trade (CIT), VATabout