A federal court has delivered another setback to the trade agenda of President Donald Trump, ruling against the 10% tariff he imposed as a replacement for duties previously struck down by the Supreme Court. According to the source, consumer prices are still unlikely to decline as the Iran war continues and the administration explores alternative methods to enforce tariffs.

Read also: Tariffs Refunds and Small Businesses

Court Ruling and Appeal

The Court of International Trade, in a 2-1 decision on May 7, determined that the president’s February use of Section 122 of the Trade Act of 1974 to impose the 10% levy was unlawful. While the majority of judges prohibited the administration from collecting these tariffs from Washington state and two companies that also challenged the policy, the tariffs will remain in effect for most importers until the appeals process concludes.

U.S. Trade Representative Jamieson Greer confirmed on May 8 that the administration plans to appeal the ruling and is optimistic about its prospects. Greer stated that President Trump is committed to using tariffs to safeguard the economy, adding that the administration will follow the law and comply with court orders, but that the president’s policy is not changing.

Boston College economics professor Brian Bethune described the appeal as a long shot, noting that similar efforts with previous tariffs under the International Emergency Economic Powers Act had failed. He called the appeal a low-probability attempt because the conditions for Section 122 simply do not apply.

Why Tariffs Are Not Over

Regardless of the ruling, the administration retains several other avenues to implement tariffs, which are a cornerstone of President Trump’s economic policy. One path involves Section 301 of the same 1974 act, which requires investigations but permits an administration to levy tariffs in response to foreign government actions that burden or restrict U.S. commerce. Greer has previously announced Section 301 investigations into several countries and the European Union.

It is unclear whether the effective tariff rate will be lower, higher, or on par with levels seen last year after President Trump issued tariffs on nearly every U.S. trading partner using the International Emergency Economic Powers Act, which the Supreme Court ruled illegal in February.

Drew DeLong, head of corporate statecraft at Kearney Foresight, an internal think tank at global management consulting firm Kearney, stated that if the Section 301 investigations proceed as the administration intends, the effective tariff rate at the end of this year should be close to its level at the end of 2025 and possibly higher.

Source: IndexBox Market Intelligence Platform