U.S. trade court voids 10% global tariff

The U.S. Court of International Trade ruled on May 7 that President Donald Trump unlawfully used Section 122 of the Trade Act of 1974 to impose a 10% tariff on most imports, handing the administration another setback in its effort to preserve a fallback tariff regime. The divided three-judge panel said the statute did not authorize the surcharge Trump announced in February after the Supreme Court struck down earlier global tariffs imposed under a different law. (news.bloomberglaw.com) The Justice Department appealed a day later, and the U.S. Court of Appeals for the Federal Circuit has since consolidated the cases and granted an administrative stay while it considers a broader request to pause the lower-court ruling. (cafc.uscourts.gov) ### Which tariff did the court strike down? Trump imposed the 10% import surcharge on February 20, 2026, through Proclamation 11012, invoking Section 122 to address what the administration described as large and serious U.S. balance-of-payments deficits. Section 122 allows temporary import surcharges of up to 150 days unless Congress extends them. The Court of International Trade said Proclamation 11012 did not identify the kind of balance-of-payments deficit required by the statute. The panel drew a distinction between the broader trade, current-account and investment deficits cited by the White House and the narrower trigger Congress wrote into Section 122 in 1974. (news.bloomberglaw.com) ### Why did the judges say Section 122 did not fit? The trade court said Section 122 had never previously been used and that the administration's reading stretched the law beyond its text. The panel concluded that the proclamation was "unsupported" by Section 122 because it did not identify balance-of-payments deficits within the meaning of the statute, according to the court and legal summaries of the ruling. (dorsey.com) A 2-1 vote underscored that the panel was divided, but the majority still entered judgment against the government. Bloomberg Law reported that the court declined to issue a universal injunction, limiting immediate relief to the plaintiff-importers and Washington state while finding other states lacked standing as direct importers. (dorsey.com) ### Who got relief right away, and who did not? The plaintiffs included V.O.S. Selections, Plastic Services and Products, MicroKits, FishUSA and Terry Precision Cycling, along with a coalition of states led by Oregon. The court's order, as described by Bloomberg Law and Dorsey, immediately protected only three plaintiff-importers and Washington state rather than every importer paying the tariff. (dorsey.com) Oregon and 11 other states were part of the state case, but the panel said most states could not obtain the same relief because they were not direct importers. That standing ruling left open the prospect of additional suits by companies seeking their own injunctions or refunds. ### What happened after the ruling? (news.bloomberglaw.com) The Justice Department filed its appeal on May 8, according to Bloomberg Law, and Trump criticized the decision the same day, telling reporters the administration would "always do it a different way." U.S. Trade Representative Jamieson Greer said on Fox Business that the administration was confident it would prevail on appeal. (cit.uscourts.gov) The Federal Circuit then consolidated the appeals in cases 2025-1812 and 2025-1813 and granted an administrative stay while it considers the government's motion for a stay pending appeal. That order means the lower court's injunction is paused for now while the appellate court weighs the next step. (cit.uscourts.gov) ### Why are Amazon, Costco, Nike and FedEx showing up in related litigation? Amazon, Costco, Nike and FedEx are facing proposed consumer class actions that argue companies raised prices or collected tariff-related charges and did not pass savings back after earlier Trump tariffs were invalidated by the Supreme Court. Those cases are separate from the Section 122 appeal, but they reflect a broader fight over who keeps money tied to tariffs later found unlawful. (news.bloomberglaw.com) Reuters reporting summarized in syndicated coverage said Amazon was sued on May 15 in Washington state court over alleged tariff-linked price hikes, while Nike, Costco and FedEx have been named in other proposed refund or overcharge suits filed in 2026. (cafc.uscourts.gov) The claims vary by defendant and forum, and none of those allegations has been adjudicated. ### Which import sectors are watching this most closely? Apparel, textiles and gems are among the sectors watching the case because they are heavily exposed to broad import duties and often operate on thin margins, according to trade lawyers and industry advisers cited in legal analyses. Dorsey said importers should consider whether to seek their own injunctions or refunds while the appeal proceeds. (msn.com) July 24, 2026, is the date the Section 122 surcharge would expire absent congressional action, according to Dorsey, and the Federal Circuit's next order on the government's stay request will determine whether the tariff remains in effect while the appeal continues. (dorsey.com) (msn.com)