On May 7, 2026, the U.S. Court of International Trade ruled 2-1 in Burlap and Barrel, Inc. v. Trump that the Trump administration's tariffs imposed under Section 122 of the Trade Act of 1974 are unlawful. The court granted a permanent injunction. Plaintiffs: a Florida-based toy manufacturer, a New York-based spice importer, and the State of Washington. Trump appealed the next day, May 8.
The ruling is the second time in three months that courts have blocked Trump's tariff scheme. On February 20, 2026, the Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump that IEEPA does not authorize the President to impose tariffs. Roberts wrote the opinion; Trump-appointed Justices Gorsuch and Barrett joined the majority. Trump's response on February 20 — the same day SCOTUS struck down his IEEPA tariffs — was to sign an executive order imposing a new 10% global tariff under Section 122. Section 122 is a never-before-used provision designed for 'fundamental international payments problems,' not as a backdoor for tariff schemes the Supreme Court had just struck down. Treasury Secretary Bessent told CNBC at the time that the goal was to restore tariff rates to their pre-SCOTUS levels 'within five months' — an admission now in the legal record as evidence of intent.
The Customs and Border Protection refund process triggered by the SCOTUS decision is already underway: $166 billion in IEEPA tariffs paid by importers is being refunded. The Section 122 strikedown adds the layer that the replacement tariffs were also unlawful. The administration's appeal is to the Federal Circuit, then likely back to SCOTUS.
The broader pattern is the documented characteristic of the second-term administration: when courts block direct executive action, the response is to invent a new mechanism for the same outcome. SCOTUS strikes IEEPA → administration uses Section 122 → Court of International Trade strikes Section 122 → administration appeals. When courts block direct action against offshore wind, the response was to pay developers $2 billion to walk away (TotalEnergies $1B, Bluepoint + Golden State $900M). When courts block election executive orders, the response is FBI raids, voter-data lawsuits, and Election Integrity Army announcements. The tariff sequence is the cleanest example because it's the same legal question (does the president have unilateral authority to impose tariffs) twice answered no by federal courts.