The Federal Circuit Court of Appeals in Washington ruled on Thursday that the United States government may continue imposing the 10% global tariff introduced in February, as legal challenges to these tariffs proceed through the courts.
This decision marks a procedural win, albeit not a final verdict, for the Trump administration, as the court concluded that its argument "is likely to succeed on the merits."
The Legal Battle's Origins
The legal confrontation began on February 20, 2026, when the U.S. Supreme Court ruled in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act does not grant the president authority to impose tariffs, thereby nullifying the broad, reciprocal tariffs Trump had implemented on nearly all countries since 2025.
In response to this setback, Trump promptly invoked Section 122 of the Trade Act of 1974, instituting a new temporary global tariff of 10%, effective February 24, 2026. This section, previously unused for import taxes, permits the president to impose global tariffs up to 15% for a maximum of 150 days, after which congressional approval is needed for extensions.
Section 122's Importance and Controversy
Section 122 is designed to address what it terms "fundamental international payment problems." The core issue in the litigation is whether this can be applied to trade deficits—the gap between what the United States sells and buys from abroad—as argued by the Trump administration.
Critics and lower courts have challenged this interpretation, stating that the president overstepped the powers granted by Congress.
Previous Setback: International Trade Court
Last month, a three-judge panel from the International Trade Court in New York deemed the 10% global tariffs illegal in a split decision, following a lawsuit by small businesses, including Burlap & Barrel and Basic Fun!, and the state of Washington.
The majority opinion declared that the tariffs are "invalid" and "not authorized by law," asserting that Trump overreached his tariff authority delegated by Congress. The Federal Circuit's ruling temporarily overturns this decision, allowing the tariffs to remain in effect during ongoing litigation.
What Happens if the Tariffs Expire on July 24?
The Section 122 tariffs are set to expire on July 24, 2026, 150 days after their implementation. Extending them would necessitate congressional approval, a scenario analysts consider unlikely given the limited legislative support.
Consequently, the Trump administration is pursuing a more enduring solution through Section 301 of the Trade Act of 1974, which permits tariffs without size limits and can extend up to four years with the possibility of renewal.
The United States Trade Representative's office has initiated investigations and public hearings, with a comment period ending on July 6, 2026, and hearings set for July 7.
Potential Supreme Court Involvement
The legal battle is far from over. Judicial sources and analysts agree that the case may ultimately reach the Supreme Court, which previously intervened to halt Trump's tariff policy and may need to rule again if the dispute escalates.
Meanwhile, the federal government continues to collect the 10% tariff under the temporary authorization of the Court of Appeals, providing a temporary yet crucial reprieve for the Trump administration's trade strategy.
Understanding the Impact of Tariff Decisions
What is Section 122 of the Trade Act of 1974?
Section 122 allows the U.S. president to impose global tariffs of up to 15% for a maximum of 150 days to address fundamental international payment problems, after which congressional approval is required for extensions.
Why are the 10% global tariffs controversial?
The controversy stems from differing interpretations of Section 122's applicability to trade deficits, with critics arguing that the president exceeded his powers, leading to legal challenges and court rulings against the tariffs.
What could happen if the tariffs are challenged in the Supreme Court?
If the case reaches the Supreme Court, the justices would need to determine the legality of the tariffs under current laws, potentially setting a precedent for future presidential tariff actions.