U.S. court invalidates 10% tariff

The U.S. Court of International Trade on May 7 struck down President Donald Trump’s 10% global tariff, ruling that Section 122 of the Trade Act of 1974 did not authorize the administration’s use of a broad import surcharge. The three-judge panel said the proclamation was invalid and that the tariffs were unauthorized by law. (polsinelli.com) The Justice Department appealed on May 8 to the U.S. Court of Appeals for the Federal Circuit. The ruling came after the Supreme Court had already invalidated an earlier set of Trump tariffs imposed under the International Emergency Economic Powers Act. The court’s order did not immediately erase the tariff for every importer. The injunction was limited to the plaintiffs in the case, including the state of Washington and importers Burlap & Barrel and Basic Fun!, and the duties remain in effect for most importers while the appeal proceeds. (cnbc.com) Section 122 tariffs were imposed as a temporary measure for up to 150 days and, absent congressional action, were scheduled to expire on July 24, 2026. ### Why did the trade court say Section 122 did not cover this tariff? Section 122 allows a president to impose temporary import restrictions when the United States faces what the statute calls “large and serious” balance-of-payments problems. (polsinelli.com) The Trump administration argued that modern trade and current-account deficits met that standard. The court rejected that reading. The majority wrote that Congress in 1974 used “balance-of-payments deficits” in a more specific sense than a trade deficit. “It is clear that Congress was aware of the differences in the words it chose,” the judges wrote, according to ABC News’ account of the opinion. That conclusion undercut the legal basis for using Section 122 as a fallback after the Supreme Court blocked the earlier IEEPA tariffs in February. (polsinelli.com) ### If the tariff was invalidated, why are refunds suddenly central? U.S. Customs and Border Protection said in a court filing this month that more than $35 billion in refund money had already been processed and that the government owes roughly $166 billion overall, CNBC reported on May 22. That has pushed large importers to decide whether to claim money back and what to do with it. (polsinelli.com) Walmart told investors it is seeking refunds and plans to use any money it receives to support lower prices for shoppers. CNBC reported that Home Depot, Apple, Nike, General Motors, FedEx, Costco and John Deere were also among companies that said they were trying to recover tariff payments. Trump had said he would “remember” companies that did not seek refunds. (abcnews.com) ### Why is Amazon in court over money it has not claimed? Amazon was sued on May 15 in federal court in Seattle by consumers who said the company raised prices to pass along tariff costs and then failed to pursue refunds after the Supreme Court invalidated the earlier IEEPA tariffs. The proposed class action alleges Amazon collected hundreds of millions of dollars in unlawful tariff costs through higher prices on imported goods. (cnbc.com) The complaint says Amazon’s choice not to seek refunds was “not because it lacks a legal basis to do so, but because it seeks to curry favor with Trump by allowing the federal government to retain the funds,” according to Reuters’ report on the filing. (cnbc.com) The lawsuit argues that the money at issue belonged to customers who paid higher prices, not to Amazon. ### What happens next in the tariff case? The Federal Circuit now has the administration’s appeal from the May 7 trade-court ruling. Polsinelli said the tariffs remain in place for most importers pending appeal, because the Court of International Trade limited relief to the named plaintiffs. (money.usnews.com) July 24, 2026, is the date the Section 122 tariffs are scheduled to expire unless Congress extends them, according to the same legal analysis. In the meantime, companies’ refund claims and the Seattle lawsuit against Amazon will determine how much of the tariff money moves back to importers and whether any of it reaches consumers. (polsinelli.com) (money.usnews.com)