Trade court strikes down Trump's 10% global tariffs again

A three-judge panel at the U.S. Court of International Trade ruled 2-1 on May 7, 2026 that President Trump's 10 percent global tariffs are unlawful. Judges Mark A. Barnett and Claire R. Kelly wrote the majority opinion. Judge Timothy C. Stanceu dissented, arguing the majority misread the legislative history of Section 122 and that the president deserves broad deference on balance-of-payments determinations.

These tariffs took effect on February 24, 2026, after the Supreme Court struck down Trump's earlier IEEPA-based global tariffs. The administration pivoted to Section 122 of the Trade Act of 1974 as its replacement legal authority for imposing global tariffs.

Section 122 of the Trade Act of 1974 allows the president to impose tariffs up to 15 percent for up to 150 days when there are fundamental international payments problems causing large and serious balance-of-payments deficits, an imminent depreciation of the dollar, or a need to cooperate with other countries on balance-of-payments disequilibrium.

The Trump administration argued that the United States' $1.2 trillion annual goods trade deficit and a current account deficit equal to 4 percent of GDP constituted a qualifying balance-of-payments deficit. The court rejected that argument entirely.

The court's majority found that a trade deficit and a balance-of-payments deficit are not the same thing. A balance-of-payments account is a broader economic measure encompassing trade in goods and services, income flows, and capital movements. The United States runs a large goods trade deficit but has long attracted enough capital investment from abroad to offset it.

The majority wrote that if the president could define any trade imbalance as a balance-of-payments deficit, the statute would give him unlimited tariff power at any moment, since the U.S. has run trade deficits continuously for 50 years. The court said such an expansive reading would transfer Article I trade authority from Congress to the president.

The Liberty Justice Center, a conservative public interest law firm, represented the small business plaintiffs. They include Washington state importers who argued the tariffs raised their costs without legal justification. Small businesses have led both rounds of court challenges to Trump's global tariff authority.

Despite finding the tariffs unlawful, the court issued a narrow injunction. The relief covers only Washington state and the specific plaintiff companies in the case. Other importers must file their own lawsuits to get relief, meaning the 10 percent tariff continues to apply to most American importers while the appeal plays out.

This is the second time in 2026 that a federal court invalidated the legal basis for Trump's global tariff authority. In February 2026, the Supreme Court ruled in Learning Resources v. Trump that Trump's broad use of IEEPA to impose tariffs was unauthorized by law. The administration then switched to Section 122, which the trade court has now also rejected.

The administration is expected to appeal the May 7 ruling to the U.S. Court of Appeals for the Federal Circuit, which handles trade cases. From there, the case could return to the Supreme Court.

The ruling arrived one day before Trump announced the US-UK trade deal on May 8, 2026. That deal was structured as an executive agreement, a different legal mechanism that sidesteps the Section 122 question entirely. The administration's apparent strategy is to shift toward bilateral negotiated arrangements rather than relying on broad unilateral tariff authority that courts keep rejecting.

The practical effect of the May 7 ruling is limited in the short term because the injunction is narrow and an appeal will likely request a stay of the lower court order. Most American importers continue paying the 10 percent tariff while the legal battle continues.

The broader pattern across 2025 and 2026 is a sustained conflict between the executive branch and the federal judiciary over where trade authority lies. Article I grants Congress the power to regulate commerce with foreign nations and to lay and collect import duties. Congress delegated some of that authority to the president through statutes like IEEPA and Section 122, but courts have repeatedly ruled that Trump used those delegations beyond their statutory limits.

Section 232 of the Trade Expansion Act of 1962, which Trump used for steel and aluminum tariffs framed as national security measures, has survived court challenges because those tariffs carry a specific national security justification that courts have been more willing to defer to. Section 122 and IEEPA did not survive similar scrutiny.

Judge Stanceu's dissent argues that Congress deliberately left the definition of balance-of-payments deficit broad to give the president flexibility in responding to rapidly changing international economic conditions. He contends that judicial deference to executive economic determinations is appropriate here.

The dissent gives the administration a roadmap for its Federal Circuit appeal. The central question for appellate courts will be whether Congress intended to give the president broad discretion in defining balance-of-payments conditions, or whether the term has a fixed economic meaning that the trade deficit does not satisfy.