US court rules against Trump’s 10% global tariff, lending India a negotiating edge

The US Court of International Trade ruled 2–1 on May 7, 2026 that the 10% global tariff imposed under Section 122 of the Trade Act of 1974 is unlawful. The p...

What Happened

The US Court of International Trade ruled 2–1 on May 7, 2026 that the 10% global tariff imposed under Section 122 of the Trade Act of 1974 is unlawful.
The panel found that the presidential proclamation imposing the tariffs failed to identify any "large and serious United States balance-of-payments deficit" as Congress intended when enacting Section 122 — a statutory prerequisite for invoking the provision.
This ruling followed the earlier US Supreme Court ruling of February 20, 2026, which had struck down IEEPA-based tariffs (including the original 26% reciprocal tariff on India) as exceeding presidential authority.
The 10% global tariff had been in effect since February 24, 2026 — the day after IEEPA tariffs fell — and was due to expire in July 2026 unless extended by Congress.
The administration is expected to appeal to the US Court of Appeals for the Federal Circuit; India gains additional negotiating leverage as US trade tools face successive judicial limits.

Static Topic Bridges

Separation of Powers in the US Constitutional System

The US Constitution divides the power to govern across three branches: the legislature (Congress), the executive (President), and the judiciary (federal courts). Article I, Section 8 explicitly grants Congress the power to "lay and collect Taxes, Duties, Imposts and Excises" — which includes tariffs. When the executive branch imposes tariffs by invoking delegated statutory authority, courts scrutinise whether Congress actually delegated that specific power and whether the statutory conditions are met. Both the IEEPA ruling (SCOTUS, February 2026) and the Section 122 ruling (Court of International Trade, May 2026) are applications of this separation-of-powers doctrine — the judiciary checking executive overreach into a domain constitutionally assigned to Congress.

Article I, Section 8 of the US Constitution: tariff power vested in Congress
Delegation doctrine: Congress may delegate limited tariff authority to the executive, but courts will not read implied or overbroad delegations
IEEPA (1977): struck down for tariff use in Learning Resources, Inc. v. Trump (SCOTUS, 6–3, February 20, 2026)
Section 122 of Trade Act of 1974: allows up to 15% tariff if a "large and serious" balance-of-payments deficit exists — struck down May 7, 2026 for failing the statutory condition

Connection to this news: The successive judicial defeats of both IEEPA and Section 122 tariffs represent the US judiciary reasserting constitutional limits on executive trade power, directly reducing the tariff pressure on India and other trading partners.

India–US Trade Negotiations and Leverage Dynamics

Trade negotiations between countries are shaped by their relative leverage — which is partly determined by what happens outside the negotiating room. India's negotiating position vis-à-vis the US improves when the US has fewer unilateral tools to threaten market access denial. With IEEPA tariffs struck down and Section 122 also blocked, the US executive's ability to impose steep, rapid tariffs without Congress is curtailed. This creates a more balanced environment for India to negotiate on its own terms — particularly on sensitive sectors like agriculture, dairy, and digital services where India has historically resisted US demands.

India and the US have no Free Trade Agreement; trade is governed by WTO MFN terms
The November 2025 interim deal (reducing tariffs from 26% to 18%) had already extracted concessions on agricultural market access and digital services from India
Post-SCOTUS ruling, ~55% of India's US-bound exports reverted to standard MFN rates
India's leverage increases as the US is unable to credibly threaten tariff hikes through executive action alone

Connection to this news: Each judicial setback for the administration strengthens India's hand in ongoing bilateral trade negotiations, reducing the coercive pressure that drove India to earlier concessions.

US Court of International Trade — Role and Significance

The US Court of International Trade (CIT) is a specialised federal court with exclusive jurisdiction over civil actions arising from US laws governing international trade and customs. Established in 1980 (successor to the US Customs Court, est. 1926), it is an Article III court — meaning its judges have lifetime tenure and full constitutional standing. CIT decisions can be appealed to the US Court of Appeals for the Federal Circuit, and from there to the Supreme Court. The Liberty Justice Center, which prevailed in the IEEPA SCOTUS case, also filed the Section 122 case (Burlap and Barrel v. Trump), creating a consistent legal strategy to dismantle unilateral executive tariff authority.

CIT established: 1980 under the Customs Courts Act; located in New York City
Jurisdiction: US import duties, tariff classification, antidumping, countervailing duties
Ruling in Burlap and Barrel v. Trump: 2–1 panel, May 7, 2026
Appeal path: CIT → Court of Appeals for the Federal Circuit → Supreme Court
Section 122 tariff was due to expire in July 2026 absent Congressional extension

Connection to this news: The CIT ruling signals that even the fallback tariff instrument deployed after the IEEPA defeat lacks the legal foundation for indefinite application, further constraining the executive's trade policy toolkit.

Key Facts & Data

US Court of International Trade ruling date: May 7, 2026 (2–1 majority)
Law invoked for 10% tariff: Section 122, Trade Act of 1974
Maximum tariff permissible under Section 122: 15% — for up to 150 days
SCOTUS IEEPA ruling: February 20, 2026 (6–3); all IEEPA tariffs terminated February 24, 2026
India's original IEEPA reciprocal tariff: 26% (April 2025); reduced to 18% under November 2025 interim deal
Case name at CIT: Burlap and Barrel v. Trump, filed March 9, 2026
After SCOTUS ruling, India's effective average US tariff rate estimated at approximately 13.4% (GTRI, February 2026)
US remains India's largest export destination; pharmaceuticals, textiles, and engineering goods are top export categories