Latest Tariffs Struck Down By Court Of International Trade

In the wake of the Supreme Court’s February 20, 2026, ruling that invalidated global 2025 U.S. tariffs imposed under the International Emergency Economic Powers Act (see Lewis Brisbois alert), the U.S. pivoted immediately to a new set of 10 percent global tariffs based on Section 122 of the Trade Act of 1974 (see Lewis Brisbois alert). This move raised questions of its own, however, as the language of that statute makes clear that it is intended to apply when it is necessary “to deal with large and serious United States balance-of-payments deficits.” 19 U.S.C. § 2132 (a)(1). While the Proclamation that announced the Section 122 tariffs sought to portray the U.S. trade deficit with other countries as “contribut[ing] to the fundamental international payments problems facing the United States,” a number of states and two small businesses challenged this justification as improperly conflating two different concepts, contrary to the legislative history of the statute. On May 7, 2026, in a 2-1 decision, the Court of International Trade agreed with the State of Washington and the private plaintiffs, granting summary judgment and a permanent injunction and striking down the U.S. government’s attempt to impose the new tariffs under the authority of Section 122.

Parsing the language of the statute and its legislative history, the court concluded that Congress carefully considered the “balance-of-payments” language and intentionally chose to use it. The court held that this language could not be stretched to cover the balance of trade circumstances cited in the February 2026 Proclamation. Declaring the Proclamation ultra vires, the court held that it was “invalid, and the tariffs imposed on Plaintiffs are unauthorized by law.” The court declined to impose a nationwide injunction, limiting it to the two small businesses and the state of Washington, which had demonstrated its standing as an importer, unlike the other states that had joined in the complaint. Given the government’s practice in other tariff cases, it is likely to appeal the decision.

Once again, the status of U.S. global tariffs is in question, although the Section 122 tariffs were due to expire in July 2026, and the U.S. is pursuing more permanent tariff initiatives under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974, which have previously been upheld by the courts. The continuing upheaval in U.S. tariff policy has created many challenges for importers, and this trend is expected to continue in the wake of this most recent ruling.