U.S. court strikes down Trump's 10% tariffs

Tariffs are taxes on imports. That part is simple. The messy part is who gets to impose them, and under what law. On May 7, the U.S. Court of International Trade said Donald Trump’s latest 10% global tariffs broke that limit too. So this is not just a trade story — it is a separation-of-powers story, and a very expensive one for companies trying to price goods in real time. ### What did the court actually do? A three-judge panel ruled 2-1 that Trump unlawfully used Section 122 of the Trade Act of 1974 to impose a 10% tariff on most imports. The majority said that law lets a president use temporary import surcharges only for a specific problem — serious balance-of-payments deficits — and that the administration stretched the term too far. Judge Timothy Stanceu dissented. (cit.uscourts.gov) ### Why was Trump using this law? Because his first tariff route had already blown up. Earlier in 2026, the Supreme Court left standing a ruling that the International Emergency Economic Powers Act did not let Trump impose his earlier sweeping “Liberation Day” tariffs. After that, the White House switched to Section 122 as a backup — basically, Plan B after Plan A got tossed. (cit.uscourts.gov) ### What is Section 122, in plain English? It is a narrow emergency valve from the 1974 trade law. It allows temporary import surcharges of up to 15% for no more than 150 days when the U.S. faces major international payments problems. That sounds broad, but the court’s point was that Congress wrote a specific economic test into the statute. A normal trade deficit is not automatically the same thing. (politico.com) ### So what was the legal fight really about? The whole case turned on one phrase — “balance-of-payments deficits.” The administration argued that in today’s economy, that should be read broadly enough to cover the U.S. trade deficit. The majority said no. Congress knew the difference between those concepts in 1974, and the text still matters. Basically, the judges said the White House was trying to use a narrow tool like a universal wrench. (abcnews.com) ### Do the tariffs stop right now? Not for everyone. This is the catch. The court granted relief only to Washington state and two businesses — Burlap & Barrel and Basic Fun — because it found the larger coalition of states lacked standing. For those three plaintiffs, the administration must stop collecting the tariff and refund what they paid, with interest. But for everyone else, the tariffs can keep biting while the appeal plays out. (abcnews.com) ### Why does standing matter so much here? Because standing decides who gets a remedy. The court can agree a policy is unlawful and still limit who benefits from the ruling. That means this opinion is powerful as precedent, but narrow as immediate relief. Other importers now have a road map for their own challenges, which could mean more lawsuits fast. (cit.uscourts.gov) ### What happens next? The Justice Department already moved to appeal. The next stop is the U.S. Court of Appeals for the Federal Circuit. There is also a timing wrinkle — these Section 122 tariffs were temporary and were set to expire in late July, so the appellate fight could end up racing a clock. ### Bottom line (cit.uscourts.gov) Trump’s backup tariff strategy just hit the same wall as the first one — courts saying Congress did not hand the president this much unilateral tariff power. But businesses are not getting clarity yet. They are getting another round of legal limbo. (abcnews.com)