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On May 7th, 2026, the U.S. Court of International Trade found that the President unlawfully used Section 122 of the Trade Act of 1974 to impose the current 10% global tariffs. The court found that the statutory “balance-of-payments” conditions required under Section 122 were not met, rejecting the administration’s argument that U.S. trade and current account deficits justified the action. Although the court limited its injunction to the specific plaintiffs in the case — Burlap and Barrel, Basic Fun, and the State of Washington — the decision raises broader questions regarding the legality of Section 122 duties currently being collected from other importers. Importantly, the ruling may open the door for additional importers to pursue litigation seeking refunds of Section 122 duties already paid.
The administration has already filed notices of appeal, ensuring the tariffs will remain in place for most importers while the case proceeds through the Federal Circuit Court and potentially SCOTUS. Trade practitioners expect further legal challenges from companies seeking broader relief and possible tariff refunds, particularly as the temporary Section 122 tariffs are currently scheduled to expire in July. At the same time, the administration is widely expected to pursue alternative tariff authorities, including potential Section 301 actions, to maintain broader tariff measures later this year.
Based on the recent decision, importers should consider taking proactive measures to protect their refunds, such as (1) monitoring the liquidation status of affected entries, (2) filing a lawsuit with the Court of International Trade, or (3) submitting protests.
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