The U.S. Court of International Trade (CIT) ruled on May 7 that President Trump's 10% across-the-board tariffs on all imports are unlawful, finding that the White House exceeded its authority under a 1970s trade statute. The ruling applies to the baseline levy imposed in 2026 as part of the administration's sweeping tariff agenda and directly challenges the legal foundation underpinning hundreds of billions of dollars in U.S. import taxes.

The court found that the administration's use of the International Emergency Economic Powers Act (IEEPA) -- a 1977 law granting the president broad authority over international transactions during a declared national emergency -- did not extend to imposing blanket tariffs on imports from all trading partners simultaneously. The decision marks one of the most significant legal setbacks to the administration's trade agenda since the tariffs were announced.

Markets reacted positively. Equity futures bounced on the news, with sectors most exposed to tariff costs -- manufacturing, retail, consumer goods, automotive -- leading the initial move. The ruling does not automatically suspend tariffs while appeals proceed, meaning importers may still have to pay the levy pending further court action, but it introduces legal uncertainty around the policy's durability.

The administration is expected to appeal to the U.S. Court of Appeals for the Federal Circuit, and potentially to the Supreme Court. The timeline for a final resolution could extend into 2027, creating a prolonged period of tariff-policy uncertainty for supply chains already reconfigured around the 2026 tariff structure.

Reuters reported the ruling on May 7, 2026. Full details are available via the Reuters report.

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U.S. Trade Court Strikes Down Trump's 10% Global Tariffs Under 1970s Trade Law