On May 7, the U.S. Court of International Trade ruled that Proclamation No. 11012 from February 20, 2026, did not fulfil the conditions required under Section 122 of the Trade Act of 1974. It follows that the Proclamation lacks legal basis.
As a reminder, Section 122 of the Trade Act of 1974 allows the U.S. President to impose tariffs or temporary surcharges or import quotas in order to (1) deal with large and serious United States balance-of payments deficits, or (2) prevent an imminent and significant depreciation of the dollar in foreign exchange markets, or (3) to cooperate with other countries in correcting an international balance-of-payments disequilibrium. Under the authority of this statute, President Trump announced Proclamation No. 11012 implementing a 10 percent ad valorem duty on all articles imported into the United States, regardless of origin, with specified exceptions, and for 150 days – which means until July 24, 2026 – unless suspended, modified, terminated or extended by the Congress. President Trump was the first president to invoke this extraordinary power delegated by the Congress.
However, the Court clearly ruled that Proclamation No. 11012 exceeded congressional delegation to the President. The Court held that, in essence, the U.S. administration’s findings (trade deficit, account deficit, negative international-investment position) were insufficient. The Court made an injunction to the Government to halt collecting the 10 per cent tariffs under five days, and to refund those already perceived with interest.
Despite the clarity of this ruling, its impact remains limited to the plaintiffs who could demonstrate that they imported: the State of Washington, Burlap and Barrel, Inc. et Basic Fun, Inc.. The other States Plaintiffs lacked standing because they could not establish sufficient actual direct harm resulting from Section 122 duties. In practice, Section 122 duties would still be collected from importers that were not plaintiffs.
The U.S. administration immediately appealed the Ruling, requesting to pause its effect, which would limit even further the impact of this ruling toward the plaintiffs themselves.
Nevertheless, its political impact should not be underestimated for three reasons:
- First, because it upholds the IEEPA case law. Indeed, the so-called reciprocal duties based on the IEEPA – which were introduced with great fanfare on April 2, 2025 (“Liberation Day”) – were first ruled unlawful by a federal court in Fall 2025, and then by the Supreme Court on February 20 of this year. For the record, reimbursement claims could reach unprecedented levels: $166 billion.
- Second, because it significantly weakens the weapon wielded by the Trump administration, which has no guarantee regarding the outcome of the ongoing investigations launched under Section 301 of the same Trade Act regarding products made with forced labour or originating from countries with excess production capacity in certain sectors.
- Finally, because it further jeopardizes the conclusion of the asymmetric trade agreement reached in July 2025 at Turnberry, for which the European Parliament has just reopened negotiations by subjecting them to multiple very strict conditions. President Trump has just set July 4, America’s Independence Day, as the deadline for these negotiations.
Uncertainty surrounding European exports to the U.S. is therefore growing.
Companies shall increase attention.