The US Court of International Trade (CIT) ruled on May 7, 2026, in a 2-1 decision that the 10% global tariffs President Trump imposed in February under Section 122 of the Trade Act of 1974 are unlawful. The decision targeted Section 122 tariffs that the Trump administration invoked as an alternative legal authority immediately after the Supreme Court struck down IEEPA (International Emergency Economic Powers Act) tariffs in February; these tariffs were limited to 150 days, set to expire on July 24. The majority held that the administration failed to demonstrate "large and serious United States balance-of-payments deficits" as Congress intended that phrase when enacting the statute in 1974.
The CIT's ruling applies directly only to three plaintiffs—the state of Washington and two small businesses, spice company Burlap & Barrel and toy company Basic Fun!—and tariffs remain in effect for other importers. The Department of Justice filed a notice of appeal with the US Court of Appeals for the Federal Circuit on May 8 and is seeking to stay the ruling. According to Ernst & Young trade policy expert Blake Harden, the ruling leaves the average US tariff rate on imports at 7.2% and its narrow scope means most businesses see limited practical impact.
The Trump administration is conducting Section 301 investigations covering 16 major trading partners—including China, the EU, and Japan—to impose alternative tariffs before Section 122 tariffs expire; these investigations are expected to conclude in July, with new tariffs taking effect. The Liberty Justice Center emphasized that the court confirmed Section 122 is a narrow, time-limited tool intended to address specific balance-of-payments crises—not a blank check for the executive branch to impose worldwide trade restrictions in response to ordinary trade deficits. The initial IEEPA emergency tariffs cost importers tens of billions of dollars, and the government now plans to refund more than $166 billion, with first payments expected next week.
Due to the ruling's narrow scope, non-party importers must continue paying Section 122 tariffs, and Customs and Border Protection (CBP) will continue collecting the 10% duties pending a ruling from the Court of Appeals for the Federal Circuit. Importers should carefully track Section 122 duties paid to preserve potential future refund rights and evaluate legal counsel and protest mechanisms. For the business community, this decision is another signal that the clarity and strength of the Supreme Court's Learning Resources decision offers opportunities to challenge the administration's tariff policies and confirms the president may only impose tariffs within the narrow bounds Congress carefully delegated.
Note: This summary draws on SupplyChainBrain's publicly visible headline + subhead + opening paragraph and on sector background on US tariff policy and court rulings.
Key Takeaways:
1. US Court of International Trade ruled Trump's 10% global tariffs under Section 122 unlawful in a 2-1 decision on May 7, 2026
2. Ruling applies only to 3 plaintiffs (Washington state, Burlap & Barrel, Basic Fun!); tariffs remain in effect for other importers
3. Section 122 tariffs expire July 24; Trump administration pursuing alternative tariff authority via Section 301 investigations
4. Government initiating $166 billion IEEPA tariff refunds; first payments expected next week
5. Importers should track Section 122 duties paid to preserve potential future refund rights and evaluate protest mechanisms
