Court of International Trade rejects 10% tariff

The U.S. Court of International Trade ruled on May 7 that the Trump administration’s 10% global tariff under Section 122 of the Trade Act of 1974 was “invalid” and “unauthorized by law,” according to court summaries and trade-law analyses. The tariff had taken effect on February 24, 2026, days after President Donald Trump issued a proclamation imposing a temporary import surcharge on most imported goods. The administration appealed, and the U.S. Court of Appeals for the Federal Circuit temporarily stayed the judgment, which means the tariff remains in effect for now. The result is a legal fight over both presidential tariff power and who, if anyone, ultimately gets money back. ### Which tariff did the trade court strike down? President Donald Trump announced the measure on February 20 in a proclamation titled “Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems.” The White House said Section 122 allowed the president to impose special import restrictions to deal with “large and serious” U.S. balance-of-payments deficits, and the 10% surcharge took effect on February 24. (cooley.com) Section 122 is a narrow statute. Trade-law summaries say it permits temporary tariffs of up to 15% for up to 150 days in response to specified international payments problems, and the administration turned to it after the Supreme Court invalidated its earlier tariffs imposed under the International Emergency Economic Powers Act, or IEEPA. (whitehouse.gov) ### What exactly did the court decide on May 7? A divided three-judge panel in the Court of International Trade held on May 7 that the administration exceeded the authority Congress gave it in Section 122. The case was brought by importers Burlap and Barrel and Basic Fun, along with the State of Washington; a separate coalition of states also sued, but the court dismissed many of those state claims for lack of standing. (cooley.com) The court did not issue nationwide relief. Cooley and other trade-law summaries say the injunction applied only to the plaintiff importers and Washington, and the government did not contest that refunds and reliquidation could follow after a final, unappealable decision. ### Why are companies still paying the tariff if the court rejected it? (cit.uscourts.gov) The Federal Circuit stepped in after the May 7 ruling. Trade-law analyses say the appeals court temporarily stayed the judgment while it considers whether broader relief should be paused during the appeal, leaving the Section 122 tariff in force for the affected importers for now. (cooley.com) That procedural step matters because the trade court’s ruling was already limited. Even before the stay, the decision did not automatically stop collection for every importer in the country, and several legal alerts said the practical impact was narrower than the headline suggested. ### Where does Amazon fit into this fight over refunds? (cooley.com) Amazon.com was sued on May 15 in federal court in Seattle by consumers seeking refunds for higher prices they say reflected unlawful Trump tariffs imposed earlier under IEEPA. Reuters reported that the proposed class action alleges Amazon passed tariff costs on to shoppers and then did not return those amounts after the Supreme Court concluded the tariffs had been unlawfully imposed. (cooley.com) The Hagens Berman complaint says the importer of record is the party entitled to recover tariff refunds from the federal government, and it accuses Amazon of choosing not to seek those refunds. The complaint says the money “do[es] not belong to Amazon” because consumers paid higher prices tied to the tariffs. (money.usnews.com) ### Why does the refund issue go to companies instead of households? Importers, not retail customers, are generally the parties that pay duties to Customs and can seek refunds if tariffs are later invalidated. Hagens Berman said nearly 2,000 importers began trying to recover tariff refunds after the Supreme Court’s IEEPA decision, which is why the consumer suit against Amazon focuses on whether a retailer should pass any recovered money back to shoppers. (hbsslaw.com) That distinction helps explain the current split between the Section 122 case and the Amazon case. The trade-court ruling is about whether Trump could impose the tariff under Section 122 at all; the Seattle lawsuit is about whether consumers can claim a share of tariff-related money that companies may recover or choose not to pursue. (hbsslaw.com) ### What happens next in the tariff case? The next formal step is the Federal Circuit’s handling of the government’s appeal. Trade-law summaries say the stay remains in place while the appellate court decides whether to keep the trade court’s injunction on hold during the case, and any final ruling could determine whether plaintiff importers receive refunds on Section 122 duties already paid. (cooley.com) The Seattle consumer case against Amazon is also moving separately in U.S. District Court for the Western District of Washington, where plaintiffs filed on May 15. Those two tracks — the Federal Circuit appeal over Section 122 and the consumer refund suit against Amazon — are the clearest places to watch for the next concrete developments. (hbsslaw.com) (cooley.com)