Trade Court Strikes Down Trump’s Second Round of Global Tariffs

The latest trade court ruling put a sharp legal limit on one of Donald Trump’s favorite economic weapons: broad tariff power. In a 2-1 decision, the U.S. Court of International Trade said the president unlawfully used Section 122 of the Trade Act of 1974 to impose a 10 percent global tariff, finding that the law’s reference to “balance-of-payments deficits” did not simply mean a trade deficit. For businesses that have spent years building prices, contracts and supply chains around Trump-era tariff shocks, the ruling underscored how unstable that policy framework has become.

Judges Mark Barnett and Claire Kelly formed the majority, while Judge Timothy Stanceu dissented. The panel said the administration misread Section 122, a statute that allows temporary import surcharges of up to 15 percent for no more than 150 days when the United States faces fundamental international payments problems. The 10 percent duties took effect in February 2026 and were set by statute to expire in late July, but the court found the White House had stretched the law past its intended use. Jeffrey Schwab, whose Liberty Justice Center represented Burlap and Barrel and Basic Fun, said Section 122 is not designed to address long-running trade deficits.

The immediate legal relief was narrow. The court barred the administration from collecting the duties from Washington state and the two companies that sued, but it did not grant nationwide relief to the hundreds of thousands of importers paying the tariffs. Twenty-four Democratic-led states also challenged the policy, but the court said they lacked standing. That leaves the ruling as a powerful precedent, but not yet a blanket reprieve for importers or consumers who may still be absorbing higher costs.

The decision was the second major courtroom defeat for Trump’s tariff strategy. Earlier, the Court of International Trade unanimously ruled on May 28, 2025, that he had overstepped his authority under the International Emergency Economic Powers Act by imposing tariffs on Canada, Mexico, China and more than 60 other trading partners. The U.S. Supreme Court later struck down that broader regime in February 2026, after which Trump turned to Section 122 as a backup route.

The administration still has legal and policy options, and the trade fight is not over. The Office of the U.S. Trade Representative launched Section 301 investigations into dozens of countries in March 2026, a step widely seen as a possible foundation for new tariffs later this year. For now, though, the court’s message was clear: even in an era of aggressive trade policy, the president’s tariff power has limits, and those limits are now being enforced in court.