The U.S. Court of International Trade struck down the Trump administration’s 10 percent global tariff on May 7, 2026, ruling that the statute the White House invoked under Section 122 of the Trade Act of 1974 does not authorize the levy. The decision came in a 2-1 ruling, and the administration filed an appeal on May 8.
The plaintiffs that won relief are two small business importers, toy company Basic Fun!, spice importer Burlap and Barrel, plus the State of Washington. The narrow scope of the order means most other importers will keep paying the 10 percent duty pending appeal, but the legal direction matters for every self-employed seller and microbusiness that imports finished goods or raw inputs.
What The Ruling Actually Does
The court invalidated tariffs imposed under Section 122, a statute that authorizes the president to respond to large and persistent balance-of-payments deficits with temporary import surcharges. The majority held that the administration redefined the term using modern current-account metrics, which was not how Congress wrote the statute in 1975.
Critically, the relief is narrow. The court granted a permanent injunction only to the named plaintiffs and the State of Washington, declining to enjoin nationwide collection. Other importers will continue to pay the 10 percent duty unless and until a higher court or a future ruling extends the injunction beyond the original cohort.
The administration filed its appeal on May 8 and is expected to pursue both the Federal Circuit and parallel statutory authority, including Section 232 national security tariffs and potential Section 301 actions, to keep import surcharges on the books in some form.
Why The Ruling Matters For Self-Employed Importers
Self-employed Etsy and Shopify sellers, dropshippers, indie product brands, and microbusiness owners that source from overseas have been absorbing the 10 percent Section 122 duty since February. For low-margin lines, the surcharge has been the difference between profitability and survival mode, and a separate Supreme Court ruling earlier this year already opened a $166 billion IEEPA refund pool that small importers are still working to access.
Two small business owners now have a direct path back to pre-tariff pricing for their own SKUs, a meaningful tactical win. The bigger signal is that the courts are skeptical of the administration’s interpretation of import surcharge authority, and that skepticism is what self-employed importers should plan around through the back half of the year.
What Self-Employed Importers Should Do Next
Solo importers who paid the 10 percent Section 122 surcharge should document each entry that fell under the levy, including entry summary numbers, payment dates, and product classifications. That paper trail is what would qualify them for a refund if a future ruling extends relief beyond the named plaintiffs, mirroring the process the IEEPA refund cohort is now navigating.
Importers should also revisit their customs brokers and consider filing protective protests for tariff-affected entries within the 180-day window allowed by U.S. Customs and Border Protection. Self-employed sellers who already filed for IEEPA refunds through the CAPE portal can lean on the same broker relationship to keep Section 122 records ready for the next phase of litigation.
What To Watch Next
The Federal Circuit’s review of the administration’s appeal will determine whether the injunction’s scope remains narrow or expands. A broader ruling could open Section 122 refunds in the same way the Supreme Court’s IEEPA decision opened the door to the $166 billion already moving through the CAPE portal, and that timeline could tighten if the appeals court fast-tracks the case.
Self-employed importers should also watch for the administration’s parallel tariff moves under Section 232, Section 301, and other statutes. The White House has signaled it will keep import surcharges on the table even as courts test the legality of each successive authority, and microbusiness margins will keep flexing with each new layer of duty that lands.
Photo by Ivan Karpov: Unsplash
