- Lead. The US Court of International Trade ruled 2-1 on May 8 that the 10% across-the-board import surcharge President Trump imposed under Section 122 of the Trade Act of 1974 was “unlawful and unauthorized by law,” the second major judicial defeat for the administration’s tariff strategy in less than three months.
- Fact. The first blow came from the Supreme Court, which ruled 6-3 in February that the president cannot impose sweeping open-ended tariffs under the International Emergency Economic Powers Act (IEEPA) — the primary legal vehicle used for most of the 2025-era levies.
- Stake. The 10% surcharge expires in July unless Congress votes to extend it, which analysts describe as unlikely given current floor dynamics; the administration’s plan to appeal and seek an emergency stay means legal uncertainty over import costs will persist through the second half of 2026.
President Trump’s attempt to replace the tariffs struck down by the Supreme Court with a new authority under an obscure 1974 trade law has itself been overturned, leaving the administration’s broad tariff architecture in an uncertain legal position just as the replacement levy approaches its statutory expiry date, according to an analysis by the Conference Board.
The legal sequence
The chain of court defeats began on February 20, when the Supreme Court ruled in Learning Resources Inc. v. Trump that the International Emergency Economic Powers Act does not authorise the president to impose sweeping, open-ended tariffs. The 6-3 decision held that only Congress can authorise a tariff of that breadth, effectively nullifying the IEEPA-based tariffs that had underpinned much of the administration’s 2025 trade agenda.
Within four days, the administration pivoted to Section 122(a) of the Trade Act of 1974, a provision allowing temporary import surcharges to address balance-of-payments deficits, and imposed a 10% global tariff starting February 24. The Court of International Trade found this application equally flawed: the 2-1 panel ruled on May 8 that the administration had failed to properly identify a balance-of-payments deficit as the statute defines the term, noting that the interpretation used by the White House would effectively allow the president to find a deficit in almost any circumstance — a reading the court called legally unsustainable.
Limited relief, large uncertainty
The practical impact of the CIT ruling is, for now, narrow. The court granted relief only to the named plaintiffs in the case — importers who had the legal standing to sue — rather than issuing a blanket injunction applying to all affected businesses. Importers who paid the surcharge but were not party to the litigation continue to do so pending appeal.
The administration has signalled it will appeal the decision and seek a stay from the Court of Appeals for the Federal Circuit. Should a stay be granted, the 10% tariff could remain in effect even as its statutory 150-day clock runs out in July. A legislative extension through Congress is considered unlikely: the administration has not publicly sought one, and the tariff’s broader unpopularity with import-dependent industries makes floor passage uncertain.
What tariff authority remains
The rulings leave the administration’s remaining tariff tools considerably narrower than those deployed in 2025. Section 301 investigations — the authority used for China-specific tariffs — remain intact and are not subject to the same IEEPA and Section 122 challenges. Two major Section 301 investigations with 76 separate potential tariff determinations are currently under way, providing a legal pathway for targeted levies on specific trading partners or industries, even as the broader global surcharge faces extinction.
The combined effect of the legal rulings and the trade-route disruptions already reshaping global supply chains has left importers navigating a landscape in which published tariff rates may bear limited relationship to what is ultimately enforceable — a situation that legal and trade advisers say is complicating forward purchasing decisions for manufacturers and retailers planning 2027 procurement.