The U.S. Court of International Trade (CIT) has once again checked the executive branch's power, striking down a broad 10% tariff on most imports.
This legal saga began over a year ago with the administration's pursuit of a sweeping tariff wall. In April 2025, the White House first tried to use the International Emergency Economic Powers Act (IEEPA), a powerful law intended for national emergencies, to impose "reciprocal" tariffs. The idea was to create a universal levy that could be used as leverage in trade negotiations. However, this move was immediately challenged by businesses and states who argued the law was being misused.
The courts agreed with the challengers. The first major blow came in May 2025 when the CIT ruled against the IEEPA-based tariffs. This legal battle escalated all the way to the Supreme Court, which delivered a decisive ruling in February 2026: IEEPA does not grant the President the authority to impose tariffs. This decision dismantled the administration's primary tool for its trade policy.
However, the story didn't end there. On the very same day as the Supreme Court defeat, the White House pivoted to a different legal authority: Section 122 of the Trade Act of 1974. This law allows for a temporary surcharge on imports if the U.S. is facing a "large and serious balance-of-payments problem." A new 10% global surcharge was immediately proclaimed, and customs began collecting it within days.
This quick maneuver led directly to the latest legal showdown. Opponents argued that the U.S. did not have the kind of severe balance-of-payments crisis that Section 122 was designed to address. During oral arguments in April, judges on the CIT panel openly questioned the administration's justification, signaling their skepticism. The court's final ruling confirmed this, finding that the legal conditions for using Section 122 had not been met.
With two major legal avenues for broad tariffs now closed, the administration's strategy must evolve. The focus will likely shift from universal levies to more targeted, sector-specific actions authorized under different statutes, like Section 301 (for unfair trade practices) and Section 232 (for national security). This means the era of trade protectionism is not over, but it will become more precise and fragmented.
- Glossary
- Section 122: A provision of the Trade Act of 1974 allowing temporary import surcharges to address a "large and serious" balance-of-payments deficit.
- IEEPA (International Emergency Economic Powers Act): A law granting the President broad authority to regulate international commerce after declaring a national emergency. Courts have ruled this does not extend to imposing general tariffs.
- CIT (Court of International Trade): A specialized U.S. federal court that handles cases involving international trade and customs laws.