U.S. court invalidates Section 122

President Donald Trump’s fallback 10% global tariff has run into another court setback, but the tariff is still being collected while the appeal moves forward. On May 7, a divided three-judge panel of the U.S. Court of International Trade held that the administration had no authority under Section 122 of the Trade Act of 1974 to impose the temporary surcharge on imports from nearly every country. The administration appealed the next day, and on May 12 the U.S. Court of Appeals for the Federal Circuit issued an administrative stay that paused the lower court’s order. That sequence has left importers with a legal ruling against the tariff on the merits, but no immediate systemwide end to the duty. ### What exactly did the trade court strike down? The Court of International Trade said Proclamation 11012, issued on February 20, 2026, could not be sustained under Section 122, the statute the administration used after the Supreme Court struck down its earlier IEEPA-based tariffs. Section 122 allows a president to impose duties of up to 15% for up to 150 days to address “large and serious” U.S. balance-of-payments deficits. (gibsondunn.com) The trade court said the administration had not met that statutory test. The May 7 decision was 2-1. Judges Mark Barnett and Claire Kelly formed the majority, while Judge Timothy Stanceu dissented, according to reporting on the ruling and legal summaries of the opinion. ### If the court said the tariff was unlawful, why are companies still paying it? The Federal Circuit’s May 12 administrative stay suspended the trade court’s judgment while the appeals court considers the government’s request for a longer stay pending appeal. (gibsondunn.com) That means Customs can keep assessing the 10% tariff for now. Legal analyses published after the stay said the order was procedural and did not resolve the underlying question of whether Section 122 authorizes the tariff. (politico.com) The relief in the original ruling was also narrow. The Court of International Trade granted an injunction only for the plaintiffs it found had standing: Washington state, spice importer Burlap & Barrel and toy company Basic Fun! The court did not issue nationwide relief for all importers. (strtrade.com) ### Who won in court, and who did not? Washington state and the two private companies were the only plaintiffs that received direct relief in the May 7 ruling. The broader group of state plaintiffs did not all survive the standing analysis because the court found non-importing states could not challenge the duties in the same way. (polsinelli.com) Burlap & Barrel called the ruling “a major victory for small businesses like ours,” while Basic Fun! CEO Jay Foreman described it as “an important win for American companies that rely on global manufacturing,” according to Politico’s account of the case. ### Why had the administration turned to Section 122 in the first place? (gibsondunn.com) February 2026 is the key date. After the Supreme Court invalidated the administration’s broader tariffs imposed under the International Emergency Economic Powers Act, Trump issued the Section 122 proclamation as a replacement tool for a temporary 10% global duty. Legal summaries say the Section 122 tariffs were designed to last up to 150 days and are scheduled to expire on July 24, 2026, unless Congress extends them. (politico.com) Trump has also signaled he intends to keep using tariffs through other statutes. In remarks cited by The Conversation, he said after the May 7 ruling, “we always do it a different way,” and the article said the administration has opened two Section 301 probes that could support new tariffs later this year. (gibsondunn.com) ### What should readers watch next? May 12 is the next procedural marker already on the record, because that is when the Federal Circuit put the trade court order on hold and set briefing on the government’s stay request. Legal summaries say the appeals court will now decide whether the Section 122 tariffs can remain in force during the appeal and, later, whether the statute supports the duties at all. (theconversation.com) July 24, 2026, is the next concrete policy deadline. That is the date the temporary Section 122 tariffs are scheduled to expire absent congressional action, according to trade-law analyses tracking the case and the proclamation. (polsinelli.com) (strtrade.com)