Ari Hawkins | May 7, 2026
(Politico)
A federal court on Thursday ruled that President Donald Trump unlawfully used Section 122 of the Trade Act of 1974 to impose a 10 percent global tariff — a backup plan the president implemented after the Supreme Court struck down his more sweeping worldwide tariffs earlier this year.
A divided three-judge panel on the U.S. Court of International Trade concluded that Trump’s Plan B was similarly unlawful. And the two judges in the majority barred the administration from collecting the duties from Washington state and two companies that sued over the policy.
The court did not issue nationwide relief for the hundreds of thousands of importers that have paid or continue to pay the tariffs, but it has set a precedent that other companies could point to in any legal effort to pursue similar relief.
While 24 Democratic-led states, spice importer Burlap & Barrel and toy company Basic Fun! challenged the policy, the panel found that only Washington state and the two companies had standing, leaving the injunction limited to those plaintiffs.
Trump’s February proclamation imposing the new tariffs “is invalid, and the tariffs imposed on Plaintiffs are unauthorized by law,” Judges Mark Barnett and Claire Kelly, both Obama appointees, wrote for the panel’s majority. Judge Timothy Stanceu, a George W. Bush appointee, dissented.
The ruling “means the tariffs will stay in place for nearly all parties while the appeal process plays out,” said Tim Brightbill, a trade attorney at the law firm Wiley Rein, nevertheless calling the decision a “decisive rejection” of Trump’s use of Section 122 to impose tariffs. “This decision will surely be appealed by the administration.”
An appeal would send the ruling to the U.S. Court of Appeals for the Federal Circuit, which has previously ruled against separate tariffs Trump imposed under “emergency” authorities.
The two companies that joined a challenge to Trump’s tariffs celebrated the ruling, arguing the tariffs had created major financial and operational uncertainty for businesses dependent on global supply chains.
“This ruling is a major victory for small businesses like ours,” said Ethan Frisch and Ori Zohar, co-founders and co-CEOs of Burlap & Barrel, said in a statement.
Jay Foreman, CEO of Basic Fun!, called the decision “an important win for American companies that rely on global manufacturing.”
Section 122 allows a president to impose temporary import surcharges of up to 15 percent for no more than 150 days when the United States faces “fundamental international payments problems,” including “large and serious United States balance-of-payments deficits.”
Trump’s attempt to use that statute for the replacement tariffs was legally controversial from the outset. Democratic-led states, businesses and trade lawyers argued the Nixon-era law had never been used for broad modern tariff policy and was instead intended for narrow balance-of-payments and currency emergencies. During oral arguments last month, the three-judge panel openly questioned whether the statute could legally justify Trump’s tariff program at all.
“The Court should have gone further and blocked collection of these tariffs during any appeal,” said Dan Anthony, executive director of the We Pay the Tariffs coalition, which represents small businesses, even as he praised the ruling as “more positive news” for companies harmed by Trump’s tariffs.
“American businesses paid roughly $8 billion in Section 122 tariffs in March alone, and that was just the beginning of their impacts,” Anthony added.
The Trump administration is still seeking to restore the remainder of his tariff regime using alternative authorities. In March, the Office of the U.S. Trade Representative launched investigations into dozens of countries under a separate authority — Section 301 of the Trade Act of 1974 — which is widely expected to lead to sweeping tariffs this summer.
Jeffrey Schwab, senior counsel and director of litigation at the Liberty Justice Center, which represents Burlap & Barrel and Basic Fun!, celebrated the decision in a statement, reiterating Section 122 is not designed to address long-running trade deficits.
“Congress authorized the President to impose tariffs where the United States experienced fundamental international payments problems and needed to respond to large and serious balance-of-payments deficits,” Schwab said. “That is not the situation here.”
Kyle Cheney contributed to this report.
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