Washington, May 9 -- In a fresh tariff setback for US President Donald Trump, the US Court of International Trade ruled that the Trump administration's 10% "universal" tariff levied on imports from India and countries around the world is illegal. The ruling injects fresh uncertainty for companies around the world and follows closely after the US Supreme Court struck down Trump's efforts to impose global reciprocal tariffs through the International Emergency Economic Powers Act (IEEPA) this February. Immediately after the Supreme Court's ruling in February, the Trump administration invoked economic powers under Section 122 of the Trade Act of 1974 to levy a 10% "universal" tariff on all global imports. The legal statute grants the US President to levy tariffs in order to remedy "large and serious United States balance-of-payments deficits." In its ruling today, the New York-based Court of International Trade found by a 2-1 decision that the Trump administration had not. "This case turns on the meaning of Section 122 and whether the President asserted the existence of the conditions required by the statute in order to lawfully proclaim the import surcharges. As discussed further below, the President's Proclamation fails to assert that those required conditions have been satisfied," the court judgement reads. Former US trade negotiators believe that the ruling, while a setback for President Trump, will not deter his administration from implementing global tariffs through other means. Washington has already set in motion plans to levy fresh global tariffs through Section 301 of the Trade Act of 1974, which allows the use of levies on countries that employ unfair trading practices against the United States. "This is a clear setback for the Trump administration, but I don't think it will alter the game plan to use the Section 301 investigations to replace the IEEPA tariffs. The administration will be on much more solid ground in defending against future challenges to Section 301 tariffs, and it clearly plans to leverage these tariffs to maintain all the agreements it has already negotiated and conclude pending ones, such as the Interim Agreement with India," says Mark Linscott, senior advisor for trade policy at the US India Strategic Partnership Forum. Linscott previously served as Deputy Assistant US Trade Representative for South and Central Asia. In March, the Trump administration announced it would launch Section 301 investigations into 16 major global economies, including India, for alleged unfair manufacturing practices. Public hearings are scheduled for this week. Washington plans to use these Section 301 investigations to replace earlier tariffs imposed by Trump in 2025. "We should expect an appeal by the Justice Department, which would keep the Section 122 tariffs in the courts until Section 301 tariffs are implemented. The Section 122 tariff would expire on July 24 anyhow. Thereafter the courts can decide if the Section 122 tariffs must be refunded, like the IEEPA tariffs," said Kurt Tong, managing partner at the Asia Group and a former diplomat with extensive experience in trade negotiations. Kurt Tong of the Asia Group believes the Trump administration's second judicial defeat today will lead to more caution on the part of the White House. "This second court defeat on tariffs may make USTR a bit more cautious in how they construct the expected upcoming wave of Section 301 tariffs, which the White House intends to bring tariffs back up to the levels existing at the beginning of the year. USTR's approach to Section 301 cases seemed confident when it built its cases around "overcapacity" and "forced labor" in April. Now it may worry more that businesses could successfully challenge that approach in U.S. trade courts," says Tong. The court for now only immediately blocked the administration from enforcing the tariffs against the two companies that sued and Washington state, however, making clear that it was not issuing a so-called "universal injunction." The panel found that the other states lacked standing because they aren't direct importers, instead arguing that they were harmed by having to pay higher prices for goods when businesses passed on tariff costs. It wasn't immediately clear what the ruling would mean for now for other importers that have been paying the contested levies. Jeffrey Schwab, a senior counsel for Liberty Justice Center, who represented the small businesses that filed one of the cases before the trade court, said the next steps would depend on how the administration responds and whether the US Justice Department will appeal. The White House and a Justice Department spokesperson did not immediately respond to a request for comment. Jay Foreman, chief executive officer of Basic Fun Inc., one of the companies that sued, praised the decision on a call with reporters, saying that it took "a lot of guts and chutzpah" for small businesses to put themselves on the line. Foreman said his company has been paying the contested tariffs almost daily since they took effect, and estimated they had paid more than $100,000 so far. US customs authorities collected roughly $8 billion in Section 122 tariffs in March alone, according to government data analyzed by We Pay the Tariffs, a coalition of small businesses. "Today's ruling is more positive news for the small businesses that have been crushed by these illegal taxes," Dan Anthony, who leads the coalition, said in a statement following the ruling. "The court should have gone further and blocked collection of these tariffs during any appeal." The trade court rejected the administration's stance that "balance-of-payments deficits" - a key criteria for imposing the Section 122 tariffs - was "a malleable phrase." They concluded that Trump's proclamation imposing the levies failed to identify that such deficits existed within the meaning of the 1974 law, instead using "trade and current account deficits to stand in the place." Judges Mark A. Barnett and Claire R. Kelly formed the majority and Timothy C. Stanceu dissented. The decision is the latest setback for the president's effort to levy tariffs without input from Congress. Earlier duties - overturned by the Supreme Court on Feb. 20 - were issued under a different law, the International Emergency Economic Powers Act, or IEEPA. In that case, the justices ruled Trump had exceeded his authority, kicking off a legal scramble by importers for almost $170 billion in refunds. The US Justice Department could challenge the trade court's latest ruling by taking the case to the US Court of Appeals for the Federal Circuit, which ruled against the Trump administration during the last tariff fight. The Trump administration is already working on its next tariff plan, but those levies are months away from being implemented. The US is investigating dozens of economies for forced labor practices and excess manufacturing capacity under Section 301 of the Trade Act, a process that is expected to eventually result in new duties....