A Federal Court Just Killed Trump's 10% Tariffs. The Supreme Court Already Killed the First Set.

May 7, 2026

For the second time in 2026, a federal court has ruled that Donald Trump's tariffs are illegal. On May 7, 2026, the U.S. Court of International Trade voted 2 to 1 to strike down the 10% across-the-board tariffs Trump imposed in February under Section 122 of the Trade Act of 1974. The first strikedown came less than three months earlier, on February 20, when the Supreme Court ruled 6 to 3 that Trump's earlier round of blanket tariffs, the ones imposed under the International Emergency Economic Powers Act, were also illegal. Trump has now lost his signature economic policy in court twice this year, under two different statutes, in front of two different panels of judges.

The pattern is the same. Trump claims a statute gives the president authority to impose any tariff he wants. The courts read the statute and find it does not.

What the Court Did on May 7

The Court of International Trade is a federal court that hears trade disputes. Its three-judge panel divided 2 to 1, with the majority finding that Trump's Section 122 tariffs failed the law's basic requirement: the statute lets a president impose temporary tariffs only when the United States is running "large and serious balance-of-payments deficits." The administration's proclamation did not identify any such deficit. Instead, the proclamation pointed to current-account deficits, which is a different concept under U.S. trade law. The majority wrote that the government failed to prove "any balance-of-payment deficit of the kind required by the statute."

The administration's deeper argument was that the president should get broad discretion to define what counts as a balance-of-payments deficit, an interpretation that would effectively let any sitting president impose tariffs on whatever imports they chose, on whatever theory they invented. The court rejected that reading. Giving the executive that much unilateral discretion would, in the court's view, raise a constitutional nondelegation problem, because the Constitution assigns the taxing power to Congress, not to the White House.

The ruling is not yet a nationwide injunction. The plaintiffs are small businesses, and the relief applies to them immediately. Other importers continue paying the 10% Section 122 tariff through July, when the ruling's effect broadens unless an appeals court intervenes. The administration has said it will appeal.

The First Strikedown: February 20, 2026

The May 7 ruling is the second of the year because the Supreme Court already gutted Trump's tariff regime in Learning Resources, Inc. v. Trump, decided February 20, 2026. The vote was 6 to 3. The challenge was to the IEEPA tariffs, which Trump imposed via a series of executive orders during 2025 by declaring a national emergency over foreign trade and then claiming the 1977 emergency-powers law authorized blanket import taxes.

The Court rejected the IEEPA theory in plain terms. The justices wrote that the statute's grant of authority to "regulate importation" does not include the power to impose tariffs. The power to impose tariffs is, in the Court's words, "very clear[ly] a branch of the taxing power," reserved by the Constitution to Congress under Article I. A president cannot tax imports just by declaring an emergency.

The political response was immediate. Within days, Trump terminated the IEEPA tariffs and reimposed effectively the same regime under Section 122 instead. That is the regime the Court of International Trade just struck down. Two laws, two judicial losses, same underlying policy.

The Refund Pile

The IEEPA tariffs alone collected an estimated $142 billion from importers during 2025, per U.S. Customs and Border Protection figures. Independent estimates from the Penn Wharton Budget Model put the total at over $200 billion when state and follow-on tariffs are included. The Supreme Court did not directly order refunds in February, leaving the mechanism to the lower courts and the executive branch. The administration has since opened a tariff refund portal, with checks expected starting summer 2026.

The Section 122 tariffs add to that pile. Every day they stay in effect, businesses that import goods continue paying the 10%. If the May 7 ruling holds on appeal, the federal government will owe back additional billions to importers, on top of the IEEPA refund obligation. The math here is not a rounding error. The cumulative refund liability is approaching the cost of major federal programs.

What the Tariffs Did to Prices

The tariff regime Trump campaigned on was sold as a way to bring jobs back, punish China, and finance tax cuts on the wealthy. What it actually did, in the months it was in effect, was raise the cost of nearly every imported good Americans buy. Yale Budget Lab estimates the IEEPA tariffs cost the average household over $1,200 in 2025 in direct price increases. The Tax Foundation tariff tracker shows that the effective average tariff rate jumped from roughly 2% pre-Trump to over 16% under the IEEPA regime. Imports that had been taxed at low single digits suddenly faced double-digit duties. Manufacturers passed the cost forward. Consumers paid the bill.

The promised manufacturing boom did not happen. Farm bankruptcies are up 46% year over year (covered separately on this site). The trade deficit with China shrank only marginally because importers shifted sourcing to other countries that were also tariffed, not back to U.S. producers. The price level on consumer goods rose. The benefits the president promised never materialized. The revenue went to the Treasury, was used to justify tax cuts that mostly benefited corporations and the top brackets, and is now being clawed back by judges.

The Pattern Inside the Pattern

Both rulings, IEEPA at the Supreme Court and Section 122 at the Court of International Trade, found the same thing: the statutes Trump invoked do not authorize what he did. He argued in February that emergency-powers law lets a president impose blanket tariffs. The Court said no, that is Congress's job. He argued in March that balance-of-payments law lets a president impose blanket tariffs. The court said no, those tariffs require a real balance-of-payments emergency, and there is not one.

The administration's response each time was not to ask Congress for the authority. It was to find a different statute and try again. The next statute is presumably already being drafted. Each cycle takes months to litigate, costs importers billions in interim payments, and produces a refund liability the Treasury then has to absorb.

The constitutional point in both rulings is direct. The taxing power belongs to Congress. The president can negotiate trade deals, impose targeted duties under specific narrow authorities, and respond to actual emergencies under tightly defined conditions. He cannot run a parallel tariff regime by executive proclamation just because the existing law mechanism is too slow for his political timeline. Two courts have now said this in 2026 alone.

What Comes Next

The administration appeals, the appeal is heard by the Federal Circuit, and the Federal Circuit's ruling is appealed back up to the Supreme Court. That cycle will likely consume the rest of the year. In the meantime, importers continue paying the 10% Section 122 rate until July at least, then potentially longer if appeals slow the injunction. The refund machinery for IEEPA tariffs is already running. The refund machinery for Section 122 tariffs will eventually start running. Billions of dollars are sitting in escrow against future court orders.

What the second strikedown shows is that the courts, even a Supreme Court Trump shaped, are not willing to read the statute books to give the executive blanket taxing power. He has run out of plausible legal theories. The question now is whether the appeals process drags long enough for the political cost to land somewhere other than the businesses paying the tariffs and the consumers paying the prices.

Two strikedowns in three months. The signature economic policy. The largest single source of revenue Trump tried to claim. Both rulings on the same constitutional point. The taxing power belongs to Congress. The president cannot simply declare otherwise.

Sources

Independent. Unfiltered. Unbought.

This is independent, sourced accountability reporting by Impeach 47. No corporate owners, no paywall.

Get new posts delivered free by email: impeachh47.substack.com.

Follow on X: @Impeach_47.

Follow on Threads: @impeach.47.

Follow on Instagram: @impeach.47.

Subscribe on YouTube: @impeach_47.

If this reporting is useful, the way you support us is simple: wear the movement. Every hat, shirt, and sticker from impeach47.earth is a walking billboard and the thing that keeps this research fed.