President Donald Trump’s trade agenda faced another major setback Thursday when the U.S. Court of International Trade handed a win to two small businesses and the state of Washington after they challenged the president’s 10% global tariffs, imposed after the U.S. Supreme Court struck down his previous emergency tariff regime.

In a 2-1 decision, the court granted a permanent injunction to a Florida-based toy manufacturer and a New York-based spice importer that sued the Trump administration in March, alleging the new tariffs would harm their businesses.

The court also granted relief to Washington state, which was among nearly two dozen states that sued over the tariffs.

Tariff ‘bazooka’

Jay Foreman, CEO of toy company Basic Fun!, said he was “extremely excited” upon learning the decision.

“It takes a lot of guts and chutzpah for small companies like us and Burlap and Barrel to put ourselves out on the line to fight what we feel is injustice and unfair,” he said during a virtual press conference, referring to the other company named in the lawsuit, an online spice retailer.

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“Certainly, there’s a place for tariffs on strategic products that make sense to protect in this country … but in cases across the board, to approach this situation with a bazooka instead of a fine-tooth comb makes no sense, and it hurts companies like ours, hurts companies like Burlap and Barrel, hurts the consumer,” Foreman said Thursday evening.

Basic Fun! is behind popular toys, including Tonka Trucks and Care Bears.

Foreman said he expects imports that were subject to the tariffs to arrive as soon as tomorrow.

“I’m already emailing my customs broker to make sure they’re on it,” he said.

The ruling only applies to the plaintiffs Basic Fun! and the online spice retailer Burlap and Barrel, and does not give universal relief to all businesses that must pay the blanket 10% tax on imports.

Jeffrey Schwab, who argued the case on behalf of the clients for the Liberty Justice Center, said the nonprofit advocacy law firm has been “wrestling” with what the decision means for other businesses that are paying the import tax.

“It’s not entirely clear, and probably will depend on what happens now if the government appeals. If the government seeks a stay that could have an effect. Certainly, I think companies will probably want to file (legal challenges), being concerned about making sure that the tariffs stop for them, and possibly ensuring that they get a refund too,” Schwab said.

Win for Washington state

The ruling also applies to Washington state as an importer subject to the tariffs, according to the ruling.

Washington Attorney General Nick Brown called the ruling “a win for both affordability and the rule of law.”

“It’s American consumers and businesses that have ultimately paid for the president’s illegal tariff campaign,” he said in a statement. “The court’s order will encourage more parties to challenge this illegal executive overreach.”

The judges ruled other states that sued did not have standing because they were “non-importers.” Among them were Arizona, Colorado, Kentucky, Maine, Michigan, New Jersey, Minnesota, Nevada, New Mexico, North Carolina, Pennsylvania, Rhode Island, Virginia and Wisconsin.

Trump ordered the fresh round of tariffs on February 20, the same day the U.S. Supreme Court ruled, in a 6-3 opinion, that his initial global tariffs under the 1977 International Economic Emergency Powers Act, or IEEPA, exceeded his presidential authority.

Following the Supreme Court loss, Trump’s alternative tariffs, imposed under Section 122 of the Trade Act of 1974, went into effect on February 24.

U.S. Customs and Border Protection is now in the legally mandated process of refunding businesses and importers who paid a collective $166 billion in IEEPA tariffs.

The White House did not immediately respond to a message seeking comment.