A federal trade court has ruled that President Trump acted unlawfully when imposing a 10% tariff on most U.S. imports earlier this year. The Court of International Trade found that the administration improperly used Section 122 of the Trade Act of 1974 — a rarely used law designed for currency and balance-of-payments crises.

Although the court declared the tariffs illegal, the order currently blocks collection only for the states and small businesses involved in the lawsuit. The administration is expected to appeal, and Trump has already signaled he will continue pursuing aggressive trade measures.

The ruling could eventually force the government to refund billions in collected tariff revenue. Refunds from Trump’s earlier tariffs are already underway, totaling roughly $166 billion.

The case centered on Section 122, which allows temporary tariffs of up to 15% for 150 days during severe international payment imbalances. Critics argued the law was created for a very different economic era, when the U.S. dollar was tied to gold — conditions that no longer exist.

Legal experts say the ruling sharply limits the administration’s interpretation of presidential trade powers. Still, the White House appears to have a backup strategy already in motion. Officials are now pursuing new tariffs through Section 301 investigations focused on forced labor and foreign manufacturing practices, with potential new tariff announcements expected later this summer.

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