President Trump speaking about tariffs. U.S. President Donald Trump speaks about tariffs in the White House Rose Garden on April 2, 2025. [Reuters=Yonhap News photo]

A lower court has ruled that the "global 10% tariff" mobilized by President Donald Trump to replace reciprocal tariffs, which were deemed illegal, is also invalid.

Following the U.S. Supreme Court's ruling in February that the imposition of reciprocal tariffs (country-specific tariffs) based on the International Emergency Economic Powers Act (IEEPA) was illegal, the Trump administration's "Plan B" tariff policy has now also been halted by the judiciary.

On the 7th (local time), a three-judge panel of the U.S. Court of International Trade ruled 2-to-1 in favor of the plaintiffs, stating that the 10% global tariff newly imposed by the Trump administration on all trading partners worldwide, based on Section 122 of the Trade Act, violates the law and is therefore invalid.

The court issued a permanent injunction preventing the application of the 10% global tariff to the importers who filed the lawsuit and ordered the Trump administration to refund the tariffs already paid by the plaintiff companies, along with interest.

Previously, after the Supreme Court ruled in February that imposing reciprocal tariffs based on the IEEPA was illegal, President Trump had imposed a global tariff of 10% on countries worldwide under Section 122 of the Trade Act.

In response, U.S. small and medium-sized businesses, including spice importer Burap & Barrel and toy importer Basic Fun, filed a lawsuit in federal court in March, arguing that the 10% global tariff imposed by the Trump administration based on Section 122 of the Trade Act was illegal.

About 20 states, including Oregon, also filed similar lawsuits against the Trump administration, but the court dismissed most of their claims, stating that the plaintiffs lacked standing in all states except Washington.

Section 122 of the Trade Act, which the Trump administration used as the basis for imposing the 10% global tariff, grants the President the authority to impose tariffs for up to 150 days to resolve a large-scale and serious balance of payments deficit.

The majority of the judges on the panel ruled that the Trump administration failed to meet the requirements of Section 122 of the Trade Act by confusing the balance of payments with the trade deficit when issuing the order to impose the 10% global tariff, despite these being fundamentally different concepts.

The balance of payments is an economic indicator that measures all forms of economic transactions with foreign countries by domestic residents, including goods, services, income, transfers, and finance.

In contrast, a trade deficit is a concept generally limited to the trade of goods within these transactions.

Some legal experts have suggested that the 10% tariff based on Section 122 of the Trade Act is more clearly illegal than the one based on the IEEPA, speculating that the Trump administration may have intended to buy time for up to 150 days through Section 122 of the Trade Act while reorganizing the tariff system using provisions such as Section 301 and Section 232 of the Trade Expansion Act.

The court's decision on this day was made without an evidentiary hearing (summary judgment), as the court accepted the plaintiffs' motion.

The court denied the request to extend the 10% global tariff injunction to all importers universally, beyond the plaintiff companies.

Meanwhile, Judge Timothy Stanceu, who wrote a dissenting opinion, disagreed with the majority's legal interpretation and stated that the court's sua sponte summary judgment was also procedurally flawed, as it should have provided a reasonable opportunity for both parties to respond.

The Wall Street Journal (WSJ) provided an analysis suggesting that the immediate impact of this ruling may be limited.

The newspaper stated, "The 10% tariff under Section 122 of the Trade Act was scheduled to expire in July, at which point the administration plans to transition to a different tariff system. Furthermore, because the court denied a universal injunction, not all importers nationwide will receive immediate relief from this ruling," it assessed.