CIT Strikes Down Section 122 Tariffs: Big Holding, Narrow Relief, and a Refund Map for Importers

On May 7, 2026, a divided three-judge panel of the U.S. Court of International Trade (“CIT”) held that President Trump exceeded the statutory authority under Section 122 of the Trade Act of 1974 when he imposed the Administration’s temporary 10 percent “balance‑of‑payments” tariffs earlier this year. See, The State of Oregon v. United States & Burlap and Barrel, Inc. v. United States, Slip Op. 26-47, Court Nos. 26-01472 & 26-01606 (Ct. Int’l Trade May 7, 2026). Although the court invalidated the tariff action on the merits, it declined to issue nationwide relief, instead limiting its injunction to the specific importer plaintiffs before the court. It is expected that the government will appeal this decision to the U.S. Court of Appeals for the Federal Circuit.

For businesses that import, buy from importers, or manage landed-cost budgets, the result is a paradox with practical consequences: a major legal loss for the government that, for now, leaves most importers still paying. The decision gives importers a basis to seek refunds but also makes preservation steps more important because the court’s remedy was importer-specific.

Background: The Section 122 Tariffs

On February 20, 2026, President Trump issued Proclamation No. 11012, invoking Section 122 to impose an additional 10 percent ad valorem tariff on most imported merchandise for up to 150 days, effective for covered entries beginning February 24, 2026, and continuing through July 24, 2026, unless suspended, modified, terminated, or extended by Congress. The Administration justified the measure as necessary to address “fundamental international payments problems,” citing trade deficits, current-account deficits, and the United States’ declining net international investment position. CBP implemented the surcharge under Harmonized Tariff Schedule heading 9903.03.01, with specific exemptions and guidance on Chapter 98 entries, foreign trade zones, drawback, and entry-summary sequencing.

The Court’s Analysis

In a majority opinion by Chief Judge Barnett and Judge Kelly, the CIT held that Section 122 is not a roving license to impose tariffs whenever imports exceed exports. It is a narrow delegation tied to particular international monetary conditions and to Congress’s carefully chosen language.

The court placed significant emphasis on the historical context surrounding Section 122’s enactment, including the collapse of the Bretton Woods monetary system, President Nixon’s 1971 import surcharge, and Congress’s subsequent effort to create a narrower and more structured delegation of tariff authority.

The majority focused on the “large and serious United States balance-of-payments deficits.” In the Court’s view, Congress used that phrase as a term of art rooted in the 1974 monetary context, not as a synonym for a trade deficit, current account deficit, or weak net international investment position. Because Proclamation No. 11012 relied on those latter metrics rather than the balance-of-payments deficits Congress contemplated, the Court concluded that the Section 122 proclamation exceeded the statutory authority delegated by Congress, rendering the Proclamation and resulting tariffs unlawful.

Judge Stanceu dissented. In his view, the majority read too much into legislative history, resolved the dispute prematurely on an expedited record, and should have allowed further proceedings before entering summary judgment.

Standing and Scope of Relief

The court found Article III standing only for the direct importer plaintiffs: Burlap and Barrel, Inc., Basic Fun, Inc., and the State of Washington, based on their payment or imminent payment of Section 122 duties. The remaining plaintiffs, which include 21 states and two governors in their official capacities, were dismissed because their alleged injuries flowed from downstream economic effects rather than direct tariff liability.

The remedial holding is the business-critical part. The CIT declined to issue a nationwide injunction. Instead, it enjoined CBP from collecting Section 122 duties only from the prevailing importer plaintiffs and authorized refunds, with interest as provided by law, for duties those plaintiffs already paid. For non-party importers, the surcharge remains in effect unless and until broader relief is granted, the government changes course, or final appellate ruling produces a broader mechanism.

That narrow remedy is why refund preservation matters now. The decision weakens Section 122 as a fallback tariff authority after the government’s reciprocal tariff losses imposed under the International Emergency Economic Powers Act (“IEEPA”) but does not automatically put money back in the pockets of importers who were not parties. For them, the path to recovery will depend on the appeal, future CBP action, and – critically – the procedural steps taken now to keep claims alive.

What Importers Can Do Now to Preserve Section 122 Refund Rights

• Keep paying and coding correctly: Non-party importers remain subject to the Section 122 surcharge. Continue paying to avoid clearance disruptions, but ensure heading 9903.03.01 is used only where applicable and that all exemptions, Chapter 98 treatment, FTA claims, and other exclusions are asserted and documented.
• Build an entry-by-entry refund file: Identify every entry with Section 122 duties, including importer of record, entry number, entry date, liquidation status, duty amount, country of origin, HTSUS 9903.03.01 or exemption heading, broker, supplier, and affected purchase orders. Separate duties paid directly from tariff amounts passed through by vendors.
• Calendar liquidation and protest deadlines: For liquidated entries, track the 180-day protest deadline from liquidation. For unliquidated entries, consider post-summary corrections, requests to extend liquidation where available, or other preservation measures as appropriate. Do not let entries liquidate and deadlines expire while the appeal is pending.
• Preserve proof of payment and causation: Retain CBP Form 7501s, ACE reports, duty payment records, broker instructions, commercial invoices, bills of lading, tariff-impact communications, and accounting records. Refund claims are won on law and records, and both need to be ready.
• Evaluate litigation options: Because the CIT limited relief to the plaintiffs, importers with material exposure should evaluate whether to seek importer-specific relief, intervene where available, or file protective litigation. The right answer will vary with exposure, liquidation status, and business appetite for litigation.
• Review contracts and refund allocation: Companies that passed duties through, paid vendor surcharges, or reimbursed brokers should confirm who owns any future refund and what notice or cooperation obligations apply.
• Monitor the appeal and CBP guidance: A stay, an appellate reversal, or a broader affirmance could change the refund landscape quickly. Assign responsibility now to legal, customs, finance, and logistics teams so the company can act when the next order or CBP instruction issues.

Contact Clark Hill

If you have questions regarding the content of this alert, please contact any member of Clark Hill’s International Trade Practice:

• Mark Ludwikowski (mludwikowski@clarkhill.com; 202.640.6680)
• Kevin Williams (kwilliams@clarkhill.com; 312.985.5907)
• Kelsey Christensen (kchristensen@clarkhill.com; 202.230.9889)
• Aristeo Lopez (alopez@clarkhill.com; 202.552.2366)
• Ashley Gifford (agifford@clarkhill.com; 202.640.6655)
• Laura M. Quesada (Lquesada@clarkhill.com; 202.240.0170)
• Amal Sheheen (asheheen@clarkhill.com; 202.552.2354)
• Onjoly Purification (Opurification@clarkhill.com; 202.552.2361)

Subscribe here to receive future International Trade alerts directly to your inbox.

This publication is intended for general informational purposes only and does not constitute legal advice or a solicitation to provide legal services. The information in this publication is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this information without seeking professional legal counsel. The views and opinions expressed herein represent those of the individual author only and are not necessarily the views of Clark Hill PLC. Although we attempt to ensure that postings on our website are complete, accurate, and up to date, we assume no responsibility for their completeness, accuracy, or timeliness.