Court Rules Trump’s 10% Tariff Exceeded Statutory Authority, Limits Relief to Plaintiffs

A federal trade court has ruled that President Donald Trump’s 10% global import surcharge under Section 122 of the Trade Act of 1974 went beyond the authority Congress gave the president. But the decision does not wipe out the tariff for everyone: the injunction applies only to the plaintiffs that won the case.

That makes the May 7 ruling by a three-judge panel of the U.S. Court of International Trade a major legal setback for the administration, while leaving most importers in a murkier position. The case matters because Section 122 had become the administration’s fallback tariff tool after the U.S. Supreme Court ruled Feb. 20 in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act, or IEEPA, does not authorize the president to impose tariffs.

The challenged measure was Presidential Proclamation No. 11012, signed Feb. 20. In it, Trump said, “Accordingly, I impose, for a period of 150 days, a temporary import surcharge of 10 percent ad valorem, as described below, on articles imported into the United States, effective February 24, 2026.” Section 122 allows a president to impose a temporary import surcharge of as much as 15% for no more than 150 days, but only in limited circumstances tied to international payments conditions.

In a 2-1 decision, Chief Judge Mark A. Barnett and Judge Claire R. Kelly said the proclamation did not satisfy that standard. The majority said Congress used “balance-of-payments deficits” in a specific sense when it enacted Section 122 in 1974, and that the proclamation relied on different ideas — trade deficits and current-account measures — instead. “Nowhere does Proclamation No. 11012 identify balance-of-payments deficits within the meaning of Section 122 as it was enacted in 1974,” the majority wrote.

That distinction was central to the ruling. Section 122, the court said, is a narrow and temporary authority aimed at a particular kind of international payments problem, not a general-purpose tariff power. The majority added: “Because the Proclamation’s use of trade and current account deficits to stand in the place of balance-of-payment deficits within the meaning of the statute renders the Proclamation ultra vires, the court need not reach the arguments of whether Section 122 requires the identification of ‘fundamental international payments problems’ or whether the exemptions provided in the Proclamation are lawful.”

The court granted summary judgment and entered a permanent injunction for the winning plaintiffs: Burlap & Barrel Inc., Basic Fun Inc. and the state of Washington, through its instrumentalities. It also ordered relief tied to those plaintiffs’ entries, including reliquidation and refunds with interest, where applicable. Many other state plaintiffs were dismissed for lack of standing, leaving Washington as the only state plaintiff to obtain relief.

Just as important, the court declined to issue a universal injunction. That means the ruling does not automatically stop the government from collecting the surcharge from importers that were not parties to the case, and it does not guarantee refunds for nonparty businesses. For companies that did not sue, the practical takeaway is narrow: the administration lost on the merits, but the immediate relief is limited to the plaintiffs.

Judge Timothy C. Stanceu dissented, saying the majority was wrong both on procedure and in reading the phrase “balance-of-payments” too narrowly. The ruling came against the backdrop of the Supreme Court’s February decision shutting down the administration’s earlier IEEPA-based tariff approach. The government has signaled it is seeking further review, but this account does not confirm any stay of the trade court’s order.