Trade Court Strikes Down Trump's 10% Global Tariffs, but Most Importers Will Keep Paying

A divided panel of the U.S. Court of International Trade ruled May 7 that the Trump administration exceeded its authority under Section 122 of the Trade Act of 1974. The court limited relief to three named plaintiffs and the government has already appealed.

By The Editors · May 13, 2026

On May 7, a three-judge panel of the U.S. Court of International Trade ruled, 2-1, that the 10 percent global tariffs the Trump administration imposed in February under Section 122 of the Trade Act of 1974 are unlawful. The decision is the latest in a series of judicial setbacks for the administration's tariff strategy, and the second major one this year, but its practical effect is much narrower than the ruling itself suggests. Most importers will continue paying the duties through their scheduled July expiration unless an appeals court or Congress intervenes.

The case is State of Oregon v. United States, consolidated with Burlap and Barrel, Inc. v. United States. Chief Judge Mark Barnett and Judge Claire Kelly were in the majority; Judge Stanceu dissented, writing that the majority resolved the dispute prematurely on an expedited record. The slip opinion is Slip Op. 26-47.

What the tariffs were

On February 20, President Trump issued Proclamation 11012, invoking Section 122 to impose an additional 10 percent ad valorem tariff on most imported merchandise. The tariffs took effect February 24 and are scheduled to remain in place through July 24, 2026, unless suspended, modified, or extended by Congress. U.S. Customs and Border Protection implemented the surcharge under Harmonized Tariff Schedule heading 9903.03.01.

The administration came to Section 122 by a specific route. In February, the Supreme Court struck down a previous Trump tariff regime that had been imposed under the International Emergency Economic Powers Act (IEEPA). Section 122 was, for the administration, a kind of fallback. It is a narrow statute permitting temporary import surcharges of up to 15 percent for no more than 150 days, intended to address "fundamental international payments problems," including "large and serious United States balance-of-payments deficits." Before 2026, the statute had never been used in the more than fifty years since it was enacted.

The administration justified the February tariffs by pointing to the country's roughly $1.2 trillion trade deficit recorded in 2025 and its sharply negative net international investment position. The Proclamation cited these as the "fundamental international payments problems" Section 122 was meant to address.

What the court held

The CIT rejected that reading of the statute. Writing for the majority, Chief Judge Barnett held that Section 122 is "not a roving license to impose tariffs whenever imports exceed exports." The phrase "balance-of-payments deficits," the court ruled, is a term of art grounded in 1974 economic concepts, not a flexible modern standard. The court walked through the legislative history of the Trade Act and concluded that Congress in 1974 used the phrase in a specific monetary sense that does not map onto contemporary trade-deficit or current-account-deficit metrics.

The court's reasoning on the textual point matters because of what comes next. The administration had argued that Section 122 should be read broadly, with the President given discretion to determine what counts as a balance-of-payments deficit. The court treated that argument as raising a constitutional problem rather than a textual one. If the President could simply define the statutory trigger however he wanted, the court reasoned, Section 122 would amount to a blank check for unilateral tariff-setting, which would violate the nondelegation doctrine. The court chose instead to read the statute narrowly so as to avoid the constitutional question.

The dissent saw it differently. Judge Stanceu argued the majority had over-read the legislative history, that the case should have proceeded further before summary judgment, and that the term of art the majority identified was less clearly fixed than the opinion suggested.

The standing problem and why it limits the ruling

The most consequential part of the opinion, for working importers, is not the merits but the scope of relief. The court entered a permanent injunction prohibiting collection of the Section 122 tariffs, but only as to the three plaintiffs the court found had standing: the spice importer Burlap and Barrel, Inc., the toy company Basic Fun, Inc., and the State of Washington.

The remaining state plaintiffs, including the State of Oregon as lead plaintiff in the consolidated case, were dismissed for lack of standing. The states had argued they suffered indirect economic harm as a result of the tariffs, but the court held that indirect economic injury was too speculative to support an Article III standing claim. Only entities that had directly paid Section 122 duties had a sufficient stake in the matter. Washington qualified because the University of Washington, a public institution, had paid the tariffs.

The court expressly declined to issue a universal or nationwide injunction. "Costs to one plaintiff is not an appropriate basis for the imposition of a universal injunction," the opinion notes. As a result, every importer in the United States who is not Burlap and Barrel, Basic Fun, or the State of Washington must continue paying Section 122 duties unless they file their own suit, prevail on standing, and obtain their own injunction.

The stay and the appeal

The Trump administration appealed the decision to the U.S. Court of Appeals for the Federal Circuit on May 8, the day after it was issued. The administration also filed an emergency motion to stay the CIT's injunction pending appeal, which the CIT granted on May 11. The effect, for the moment, is that even the three winning plaintiffs continue paying.

The Federal Circuit will hear the case in the coming months. Given the overlap with the earlier IEEPA tariff litigation, the case is widely expected to reach the Supreme Court regardless of which way the Federal Circuit rules. The Section 122 tariffs are scheduled to expire on July 24 by their own statutory terms. Unless Congress extends them, the question of their legality could become moot before the appellate process concludes.

Refunds and what they would look like

If the CIT's ruling is affirmed on appeal and not stayed in the interim, importers other than the three plaintiffs would not automatically receive refunds. The administrative path to recovery would likely involve filing protests with CBP or filing fresh suits at the CIT, depending on the scope of any appellate ruling.

That is the pattern that played out earlier this year with the IEEPA tariffs. After the Supreme Court struck those down in February, the CIT issued a separate order directing nationwide refunds. But the path from a single decision to actual refund checks took months, and the implementation involved coordinated guidance from CBP, customs brokers, and the importers themselves. If the Section 122 tariffs are ultimately invalidated, the same kind of multi-stage refund process is likely.

For importers of record, the practical question now is whether to preserve their right to participate in any future refund mechanism. Several customs and trade practice groups have already begun advising clients to file CBP protests or initiate parallel CIT actions to preserve refund rights, on the theory that doing so is cheap insurance against a ruling that ultimately favors importers but limits relief to those who acted to preserve their claims.

What the ruling does not affect

The decision is narrow in another important way. It addresses only Section 122 of the Trade Act. Other tariff authorities the administration has used or might use, including Section 232 (national security), Section 301 (unfair trade practices), antidumping and countervailing duties, and import quotas, are not affected. If the administration loses Section 122 entirely, it has other statutory hooks available.

That may be the most important practical takeaway from the ruling. The court did not strike down tariffs as a tool of executive trade policy. It struck down a specific use of a specific narrow statute. The administration's larger tariff strategy continues, and the legal architecture around it remains contested.