U.S. court strikes 10% tariffs

Tariffs are back in court again — and this time the fight is over Trump’s fallback plan, not the original one. A three-judge panel on the U.S. Court of International Trade said the administration could not use Section 122 of the Trade Act of 1974 to slap a 10% tariff on nearly all imports. That matters because this was the White House’s replacement tool after the Supreme Court knocked out the broader emergency-based tariffs in February. But the story got messier fast — an appeals court has already paused the trade court’s ruling, so the tariffs are still being collected for now. ### What did the trade court actually say? The Court of International Trade ruled 2-1 on May 7 that Trump’s February tariff proclamation was unlawful. The majority said Section 122 lets a president impose a temporary surcharge only for a narrow problem — a serious balance-of-payments crisis — and that the administration’s justification did not fit that statute. In plain English, the court said a normal goods trade deficit is not the same thing as the legal condition Congress wrote into the law. (politico.com) ### Why was Section 122 the backup plan? Because the first plan had already blown up. On February 20, 2026, the Supreme Court rejected Trump’s earlier worldwide tariffs that had been imposed under the International Emergency Economic Powers Act, or IEEPA. The administration then pivoted the same day to Section 122, which allows a tariff of up to 15% for no more than 150 days. Trump used 10%, and the clock was already running toward a July 24 expiration unless Congress stepped in. (politico.com) ### Who actually won relief? Not everyone paying the tariff. That is one of the biggest catches here. The court only blocked collection for the plaintiffs it found had standing — Washington state, spice importer Burlap & Barrel, and toy company Basic Fun! So even though the opinion was a broad rejection of the legal theory, the immediate practical relief was narrow. For most importers, the tariff stayed in place unless they had their own case or the ruling spread on appeal. (cnbc.com) ### So why are companies still paying it? Because the government appealed immediately, and the ruling did not stay cleanly in effect. By May 12, the Court of International Trade had granted the administration’s motion to keep collecting the Section 122 tariffs while the appeal moved forward. That means the legal blow was real, but the cash register did not stop. Businesses got a strong signal that the court thinks the tariff is unlawful, but not immediate nationwide relief. (politico.com) ### Why does this matter right now? Timing. Trump is heading into a Beijing summit with Xi Jinping on May 14-15, and trade is already sharing the agenda with Taiwan and the Iran war. The tariff ruling weakens one of Washington’s pressure tools — or at least throws it into doubt — right before those talks. At the same time, expectations for a big trade breakthrough were already low, with analysts focused more on geopolitical stability than on a clean tariff deal. (wwd.com) ### Does this mean the tariff is dead? Not yet. Basically, the courts have said the administration’s legal path looks shaky, but the appeal could run for months and may end up back at the Supreme Court. That leaves importers in an awkward spot — still paying, still tracking entries, and still wondering whether refunds will eventually come. The Nixon Peabody and Dorsey analyses both point to the same practical takeaway: preserve records now, because refund fights may come later. (cnbc.com) ### What’s the real bottom line? The big point is not just that a court disliked one tariff. It is that Trump’s second attempt to build a global tariff wall is running into the same problem as the first one — the president keeps reaching for legal authorities that courts say are narrower than he claims. For now, the 10% tariff survives because of the appeal. But the administration is negotiating with China under a cloud, and businesses still do not know whether today’s tariff bill is permanent or just a deposit on a future refund. (nixonpeabody.com) (politico.com)