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A divided panel of the U.S. Court of International Trade ruled on May 7 that President Donald Trump lacked authority under Section 122 of the Trade Act of 1974 to impose a 10 percent global tariff on imports. The decision blocks collection of the duties from Washington state and two private companies that brought the challenge, while leaving the levies in place for other importers pending any appeal. The tariffs, introduced in late February as a temporary measure, were scheduled to expire in July anyway.
Why the Ruling Matters for American Businesses
The court found that the statutory conditions for using Section 122 had not been met. Judges Mark Barnett and Claire Kelly wrote that the proclamation imposing the tariffs was invalid and the duties unauthorized by law. Judge Timothy Stanceu dissented. This outcome removes an immediate layer of import costs that had been layered on top of earlier tariff policies. Companies that had already paid the duties or adjusted pricing in anticipation of them now face clearer planning horizons for the remainder of the year.
Timeline of Tariff Developments
The sequence began earlier this year when the Supreme Court struck down a broader set of emergency tariffs. The administration responded by turning to Section 122, which permits temporary surcharges of up to 15 percent for as long as 150 days to address balance-of-payments issues. The new tariffs took effect February 24. Twenty-four states and several small businesses filed suit in early March. The May 7 decision grants permanent relief only to the state of Washington and the two importer plaintiffs, while dismissing claims from the remaining states for lack of standing.
Who Stands to Benefit
Small importers and retailers that rely on foreign goods are among the clearest winners. They had absorbed or passed along the added 10 percent cost, which affected margins and consumer prices across multiple sectors. Larger supply chains may see more modest relief because the tariffs remain in effect for most importers during the appeal window. State governments that import goods directly, such as Washington, also gain immediate protection from further collections.
What Matters Now
The ruling narrows the administration’s options for maintaining broad-based tariffs without new congressional action. Businesses can now adjust inventory, contracts, and hiring plans with greater certainty through the summer. Any appeal would likely focus on the scope of presidential authority under Section 122 rather than the underlying economic rationale. The tariffs’ scheduled July expiration still limits their long-term reach regardless of further litigation. The decision underscores the limits of using narrow emergency statutes to achieve wide-ranging trade policy goals. Companies and state governments that have navigated repeated shifts in tariff rules now have one less variable to manage in the months ahead.
