The latest judicial setback for presidential tariff power did not come from the Supreme Court. It came from the U.S. Court of International Trade, in a case involving the Trump administration’s attempt to repackage a global tariff program under a different statutory authority: Section 122 of the Trade Act of 1974.
The case, commonly reported as Burlap & Barrel, Inc. v. Trump, concerned a 10% global import tariff imposed after the administration had already lost a major tariff case before the Supreme Court. This time, the government did not rely on the International Emergency Economic Powers Act. Instead, it invoked Section 122 of the Trade Act of 1974, a provision dealing with balance-of-payments problems. According to reporting by the Associated Press and the Washington Post, the Court of International Trade ruled on 7 May 2026 that the tariff was unlawful and unauthorized by law.
The plaintiffs included small businesses such as Burlap & Barrel, a spice importer, and Basic Fun!, a toy company. The State of Washington also reportedly succeeded, while claims brought by other states were rejected for lack of sufficient financial injury. The ruling was issued by a divided three-judge panel of the Court of International Trade. Its immediate remedial effect appears to have been limited: the court halted collection of the challenged tariffs as to the successful plaintiffs, rather than issuing a nationwide injunction for all importers.
The statutory question was narrow but important. Section 122 is not a general presidential tariff power. It authorizes temporary import measures in specific balance-of-payments circumstances. In particular, it permits the President to impose temporary import surcharges, subject to statutory limits, when there are “large and serious” U.S. balance-of-payments deficits, an imminent and significant depreciation of the dollar, or a need to cooperate internationally in correcting balance-of-payments disequilibrium. The statute also limits the surcharge to a maximum of 15% ad valorem and a maximum duration of 150 days unless Congress extends it.
That statutory structure is central to the case. The administration treated Section 122 as a fallback authority for a broad global tariff. The challengers argued that the statute was designed for a much narrower problem: balance-of-payments instability, not ordinary trade deficits or generalized dissatisfaction with the structure of international trade. The Court of International Trade reportedly accepted that narrower view. The problem, in other words, was not that Section 122 never allows tariffs. It does. The problem was that the President had allegedly used it outside the conditions Congress imposed.
This makes the case analytically different from the earlier IEEPA litigation. The IEEPA issue was whether a statute that does not expressly mention tariffs could be read to authorize them. The Section 122 case is different because the statute does refer to import surcharges. The question was whether the factual and legal predicates of that specific delegation were satisfied. The answer, according to the reported ruling, was no.
The distinction matters for separation of powers. The Court of International Trade did not have to say that Congress may never delegate tariff authority to the President. Congress plainly has done so in several trade statutes. But when Congress delegates such authority conditionally, the President must respect the conditions. Section 122 is a limited, temporary, balance-of-payments instrument. It is not a blank check for across-the-board tariff policy.
The decision is therefore best understood as a statutory and constitutional warning. Presidential authority in trade law can be broad, but it is not self-defining. The Executive must identify a valid statutory basis, and the measure adopted must fit the statute invoked. A general trade deficit, or a political judgment that imports are too high, does not automatically become a “large and serious” balance-of-payments deficit within the meaning of Section 122.
The remedial posture also deserves attention. According to the available reporting, the ruling was not universal in practical effect. It benefited the successful plaintiffs and left uncertainty for other importers. Shortly afterward, an appeals court reportedly stayed the lower court’s ruling, allowing the government to continue collecting the 10% tariffs while the appeal proceeds. That stay does not resolve the merits. It preserves the status quo pending appellate review.
The case also shows the administration’s broader litigation strategy. After the Supreme Court rejected reliance on IEEPA, the administration moved to Section 122. Reports indicate that it may next turn to other trade authorities, including Section 301 and Section 232. Those statutes have different triggers, procedures, and limits. The legal debate will therefore shift from one statutory scheme to another, but the underlying question will remain the same: how much tariff power has Congress actually delegated to the President?
The importance of Burlap & Barrel lies precisely here. It suggests that courts are not only unwilling to infer tariff authority from broad emergency statutes; they may also police the boundaries of statutes that do confer tariff-related powers. The President may not convert a narrow balance-of-payments provision into a general trade-policy instrument.
For trade law, the lesson is straightforward. Tariffs are not merely regulatory measures. They are duties imposed on imports and collected by the government. They sit close to Congress’s constitutional powers over taxation and foreign commerce. Executive discretion may be substantial, but it must remain anchored in a congressional delegation.
The Section 122 case is therefore not just a technical dispute over an obscure provision of the Trade Act of 1974. It is another chapter in the judicial reconstruction of the boundary between presidential trade policy and congressional tariff authority. If the ruling survives appeal, it will stand for a clear proposition: even when Congress gives the President tariff tools, those tools may be used only for the statutory purposes Congress specified.
