Last updated on June 9, 2026
The court limited relief to Washington state and two importing companies, while dismissing most state challengers and rejecting a nationwide injunction.
A divided federal trade court invalidated President Donald Trump’s 10% import surcharge Wednesday, but narrowed the practical reach of its ruling by dismissing most state challengers and refusing to issue a nationwide injunction against the tariff.
The case turns on a technical but consequential distinction: a trade deficit is not necessarily the same thing as the kind of “balance of payments deficit” Congress addressed in 1974. The majority of the U.S. Court of International Trade treated that distinction as fatal to the tariff, while a dissent said the court needed more briefing before deciding whether Congress locked the president into 1970s measurement concepts.
The ruling in Oregon et al. v. United States and Burlap and Barrel, Inc. et al. v. United States marks another legal setback for Trump’s aggressive use of tariff authority. But it also shows the limits courts may place on lawsuits that seek broad relief against national trade policies. The court granted relief to Washington state and two importing companies, Burlap and Barrel Inc. and Basic Fun Inc., while dismissing Oregon, Colorado and other state plaintiffs for lack of standing.
The 2 to 1 decision focused on Section 122 of the Trade Act of 1974, a statute enacted after the collapse of the Bretton Woods system that had tied major currencies to the dollar and the dollar to gold. Section 122 allows the president to impose temporary import surcharges of up to 15% for no more than 150 days when “fundamental international payments problems” require import restrictions.
Trump invoked that law in February, imposing a 10% duty on all imported articles, subject to several exceptions. The proclamation said the United States faced a serious balance of payments problem because of a large goods trade deficit, a current account deficit, a negative net international investment position and deficits in primary and secondary income.
Judges Mark A. Barnett and Claire R. Kelly said those conditions did not match the statute Congress enacted. The majority wrote that the court had to determine what Congress meant by “balance-of-payments deficits” in 1974, not how executive branch economists might measure such problems today.
“Nowhere does Proclamation No. 11012 identify balance-of-payments deficits within the meaning of Section 122 as it was enacted in 1974,” Judge Barnett wrote, pointing out that no federal court had ever before been called upon to interpret that part of the relevant Trade Act.
That conclusion, Judge Barnett declared, did not require the court to decide whether the United States has serious trade or financial problems. Nor did the court claim authority to second-guess the president’s economic judgment as a matter of policy. Instead, Judge Barnett’s majority opinion said the president used the wrong statutory trigger.
The distinction is significant because trade deficits describe the gap between imports and exports of goods, or goods and services, depending on the measure used. A current account deficit is broader and includes income flows and transfers. The balance of payments is broader still, but the majority said Congress in the 1970s understood the relevant deficit through older measures linked to international monetary pressures, including liquidity, official settlements, and basic balance.
The government argued that the plaintiffs’ reading would make Section 122 nearly useless in a modern floating exchange rate system. The majority of the three-judge panel in the case rejected that argument, saying other portions of the law could still apply if the president acted to prevent a significant dollar depreciation or to cooperate with other countries in correcting an international payments disequilibrium.
The court also rejected the states’ bid to turn the case into a broader challenge on behalf of public purchasers and state agencies facing higher costs.
Washington had standing because the University of Washington directly imports goods and pays customs duties. Burlap and Barrel, a New York spice company, and Basic Fun, a Florida toy company, also showed direct injury because they imported goods covered by the tariff.
The other state plaintiffs relied on indirect economic harm, including vendor price increases, pass through tariff charges and administrative burdens. The court found those claims too speculative because they depended on decisions by third party importers and suppliers.
That standing ruling shaped the remedy. The court entered a permanent injunction for Washington, Burlap and Barrel and Basic Fun. But it refused to issue universal relief that would block the tariff for everyone.
“The public interest is served by ensuring that governmental bodies comply with the law,” Judge Barnett wrote. At the same time, his opinion said the successful importer plaintiffs could be made whole through relief limited to them and refunds, with interest as provided by law, for Section 122 duties paid before the injunction takes effect.
Judge Timothy C. Stanceu dissented, but did not offer a full defense of the tariff. Judge Stanceu instead warned that the majority had resolved a difficult statutory and economic question too quickly on summary judgment.
Stanceu said the parties had not adequately briefed the definition the majority adopted. He also questioned whether Congress clearly meant to exclude modern current account measures from the statutory phrase. In Judge Stanceu’s view, the court should have required additional proceedings before declaring the tariff unlawful.
That dissent may carry some weight on appeal. Since the Supreme Court’s 2024 decision ending mandatory judicial deference to federal agencies under Chevron, courts have taken a more direct role in deciding what statutes mean. But this case involves presidential action under a trade statute, an area where courts have often been reluctant to probe the president’s underlying factual and policy judgments.
The decision leaves the administration with a narrowed tariff defeat, not a clean sweep for the challengers. It blocks the surcharge for the importers who sued and won. It also signals that courts may police statutory limits on presidential tariff authority even when trade, currency and foreign affairs concerns shape the policy.
But for businesses and states that were not parties, the ruling leaves a more complicated question: whether the court’s legal reasoning will survive appeal, and whether other importers must sue to obtain the same protection.
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