Every time a federal court has told the Trump administration its 10 percent global import tariff is illegal, an appeals court has stepped in within days to keep the money flowing. It happened in 2025 with the first version of the levy. And it happened again in May 2026, when the U.S. Court of International Trade struck down the tariff’s second legal incarnation, only for the Federal Circuit Court of Appeals to pause that ruling on May 12 and let Customs and Border Protection continue collecting duties at the border.
Two different tariffs. Two different legal theories. Two trial-court losses for the White House. And zero interruptions to the cash register.
For the importers, retailers, and manufacturers absorbing the surcharge, the legal scoreboard is almost irrelevant. The 10 percent hit on most foreign goods entering the United States has been a fact of commercial life since February, and nothing that has happened in court has changed that.
How the administration got here: two tariffs, two legal theories
The original version of the global tariff relied on the International Emergency Economic Powers Act (IEEPA), a statute typically associated with sanctions and asset freezes rather than trade policy. The White House framed the duties as part of a national emergency response to trade imbalances. A trial court found that IEEPA does not authorize the president to impose import duties, as the Associated Press reported. But an appeals court allowed collections to continue while the government challenged the decision, and the case remains unresolved.
When that legal foundation started cracking, the administration switched statutes. On February 20, 2026, President Trump issued a new proclamation imposing the same 10 percent surcharge, this time under Section 122 of the Trade Act of 1974. That provision gives the president narrowly defined authority to impose temporary duties when the country faces serious balance-of-payments problems. The proclamation, posted on the White House website, characterizes the surcharge as a short-term response to persistent trade and payments imbalances.
Section 122 is an obscure tool with built-in guardrails. It caps tariffs at 15 percent and limits their duration to 150 days. Before this year, it had not been invoked in decades. The provision was designed for moments of acute external financial pressure, not as a platform for broad, ongoing trade policy.
What the courts have actually said
The CIT’s May 7 decision targeted the Section 122 tariff specifically. As first reported by Reuters, the court granted relief only to the importers who brought the challenge, meaning the surcharge technically remained in effect for everyone else even before the Federal Circuit intervened. When the appeals court issued its stay five days later, it restored the tariff’s full legal footing for the duration of the appeal. (The Reuters article describing the decision has been referenced in wire-service reporting, but a direct URL to the specific article is not available for verification at this time.)
The full text of the CIT opinion has not yet appeared in publicly accessible court databases, which limits what can be said about the judge’s reasoning. The central question is whether the court found that current economic conditions simply do not meet Section 122’s threshold of “fundamental international payments problems,” or whether the ruling went further and questioned whether the statute can support a near-universal surcharge on imports at all.
That distinction carries real weight. A narrow ruling focused on economic conditions would give the government room to argue the judge improperly second-guessed the president’s factual assessment. A broader ruling questioning the scope of Section 122 could reshape how any future administration uses emergency trade powers, not just this one.
The cost to businesses and consumers
For companies that import goods into the United States, the legal back-and-forth has produced a strange limbo: the tariff keeps getting declared unlawful, and they keep paying it. The 10 percent surcharge applies to a vast range of products, from electronics components and industrial machinery to clothing and food ingredients. The United States imported roughly $3.2 trillion in goods in 2024, according to U.S. Census Bureau trade data, which gives a sense of the revenue scale even if Customs and Border Protection has not disclosed collection figures for the Section 122 tariff specifically.
The surcharge sits on top of other duties that remain in place, including elevated tariffs on Chinese goods and sector-specific levies on steel and aluminum. For importers dealing with multiple overlapping tariffs, the 10 percent baseline adds another layer of cost and complexity to sourcing decisions that were already strained.
If the tariff is ultimately struck down on appeal and not reinstated, importers who paid the duties could be entitled to refunds. That possibility creates a budgetary headache for the federal government and a planning problem for companies trying to set prices. Retailers and manufacturers that depend on imported materials have been absorbing or passing along the added cost since February, and many have already renegotiated supplier contracts or shifted sourcing to try to blunt the impact.
Consumers feel the effects indirectly but broadly. Trade economists at the Yale Budget Lab and the Peterson Institute for International Economics have noted in published analyses that tariffs of this breadth tend to function as a consumption tax, with costs eventually reaching households through higher prices on finished goods. (Specific reports from both organizations discuss the distributional effects of broad-based tariffs, though direct links to those individual analyses could not be confirmed at publication time.) The burden falls hardest on lower-income households, which spend a larger share of their income on imported consumer products.
What comes next in the courts and in Congress
The Federal Circuit has not announced a timeline for oral arguments or a decision on the merits of the Section 122 case. The separate IEEPA litigation also remains unresolved at the appellate level. If either case produces a definitive ruling against the administration, the losing side could petition the Supreme Court, potentially setting up the most significant test of presidential trade authority in decades.
Congress, meanwhile, has shown limited appetite for stepping into the fight. Lawmakers from both parties have introduced legislation that would require congressional approval before a president can impose broad tariffs, but none of those bills have advanced to a floor vote. Business groups, including the U.S. Chamber of Commerce and the National Retail Federation, have filed amicus briefs or issued public statements opposing the tariffs, but their most effective channel remains the courts rather than Capitol Hill.
The tariff keeps surviving its own legal defeats
The pattern is now well established. A trial court rules the tariff unlawful. An appeals court freezes the ruling. And the 10 percent surcharge continues to be collected at every port of entry in the country. Until an appellate court issues a final decision on the merits, or the Supreme Court agrees to hear the case, the legal losses have not cost the administration a single day of revenue. For importers and the consumers who ultimately pay the bill, the courtroom victories have been entirely theoretical.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
