U.S. court strikes down tariffs, paving way for duty refunds

The U.S. Court of International Trade has ruled that President Trump went too far when imposing tariffs earlier this year, a decision that could have major implications for trade policy and international agreements.

The court ruled that the White House cannot use the International Emergency Economic Powers Act (IEEPA) to justify sweeping import tariffs. The ruling directly affects two major programs introduced in early 2025, including duties on imports from Canada, Mexico, and China.

What's been overturned

The decision targets two main sets of tariffs:

1. Emergency border tariffs: Introduced in February, duties range from 10 to 25 percent on imports from Canada, Mexico, and China.
2. Reciprocal tariffs: Currently set at 10 percent across a wide range of imports from dozens of countries, these were scheduled to increase further in July and August.

The court's decision came in response to lawsuits filed by small businesses and several states, and orders the U.S. government to cancel and stop collecting the duties already in place.

What stays the same

This decision doesn't touch any tariffs imposed under Section 232, including tariffs on steel and aluminum, or automobiles and parts. It also doesn't affect current Section 232 national security investigations into goods like lumber, copper, and pharmaceuticals.

Potential refunds for tariffs 

The U.S. Department of Justice has appealed the ruling and is expected to ask for an emergency pause on the decision while the appeal plays out. If the courts uphold the decision, the federal government may be required to issue refunds for tariffs that have already been collected.

What does this mean for trade?

The ruling creates new uncertainty around trade talks and agreements. It's unclear how the decision will affect existing deals with countries like the United Kingdom and China. It could also affect a 90-day pause that delayed planned increases on reciprocal tariffs with roughly 75 countries.