The U.S. Court of International Trade delivered a significant blow to the White House on May 7, 2026, ruling that the administration’s 10% global tariffs are unlawful. This marks the second major judicial defeat for the administration’s trade agenda this year, following the Supreme Court’s dismissal of a previous tariff package in February.
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The 2-1 decision centered on the administration’s use of Section 122 of the Trade Act of 1974. This specific law permits temporary tariffs only to address “balance-of-payments deficits.”
The court found the administration’s logic flawed, stating:
- Misclassification: Standard trade deficits were incorrectly treated as balance-of-payments emergencies.
- Executive Overreach: Using Section 122 in this manner was deemed an “invalid” use of presidential authority.
Who is Affected?
For now, the ruling is limited in scope. The court issued a narrow injunction, meaning the tariffs are only blocked for the specific plaintiffs in the case:
- The State of Washington
- Basic Fun! (Toy manufacturer)
- Burlap & Barrel (Spice importer)
All other importers must continue to pay the 10% duties unless they join the litigation or the ruling is broadened during the inevitable appeal process.
What’s Next?
The current tariffs are set to sunset on July 24, 2026. However, the legal and political maneuvering is far from over:
- The Appeal: The administration is expected to challenge this ruling in the U.S. Court of Appeals for the Federal Circuit.
- Section 301 Pivot: Observers anticipate the White House may launch new Section 301 investigations to implement a more permanent tariff structure by late July.
- Diplomatic Friction: The timing is critical, as President Trump is scheduled to meet with Chinese President Xi Jinping next week to navigate ongoing trade hostilities.
