When "Unconditional" Trade Openness Ends: What Bessent's Economic Statecraft Means for Importers

Treasury Secretary Scott Bessent's recent remarks at the Economic Club of New York, titled "American Economic Statecraft in the 21st Century," confirm that Washington no longer views U.S. openness to trade and investment as unconditional. The administration is instead recentering its trade policy around national production capacity, security, and reciprocity, invoking Alexander Hamilton's warning that a country dependent on foreign suppliers for essential inputs is neither secure nor sovereign.

These comments come as the administration rebuilds its tariff architecture through Section 301 after its earlier emergency measures faltered in court. The IEEPA tariffs were struck down, and the temporary 10-15 percent global surcharge imposed under Section 122 of the Trade Act of 1974 was itself invalidated by the Court of International Trade and, by its own terms, expires after 150 days (on July 24, 2026) absent congressional action. Against that backdrop, the administration is reconstructing the tariff wall through a sweeping expansion of Section 301 investigations rather than a simple one-for-one replacement of Section 122.

One of the first such actions targets forced-labor practices across roughly 60 economies. Importantly, these duties are proposed, not yet in force: on June 2, 2026, USTR announced its findings and proposed additional tariffs of 10 percent on imports from economies that have taken steps to prohibit forced-labor goods and 12.5 percent on those that have not, with Brazil facing a 25 percent tariff stacked on top of its 12.5 percent forced-labor rate. No duties take effect until USTR completes the public comment and hearing process. At the same time, the administration has signaled willingness to levy or expand tariffs on traditional allies, including the European Union, alongside sector-specific actions affecting semiconductors, autos, and other strategic industries.

The forced-labor action is only one piece of a broader Section 301 docket that importers should monitor. In parallel, USTR is pursuing a structural excess capacity investigation covering 16 economies, including China, the European Union, Japan, Korea, India, Mexico, Vietnam, Taiwan, Switzerland, Norway, Singapore, Indonesia, Malaysia, Thailand, Cambodia, and Bangladesh, and spanning sectors such as steel, aluminum, automobiles, batteries, chemicals, semiconductors, shipbuilding, solar modules, and robotics. Separately, USTR has initiated a Section 301 investigation into Germany's persistent underpayment for innovative pharmaceutical products, as well as an investigation into Brazil's practices relating to digital trade and electronic payment services, preferential tariffs, and anti-corruption and enforcement concerns. Each of these proceedings carries its own comment and hearing schedule, and the administration has signaled an aggressive timeline aimed at finalizing remedies around mid-2026.

While Bessent defended this agenda in a New York speech, President Trump simultaneously traveled to the Mack Trucks plant in Macungie, Pennsylvania to tout these tariffs and link them to his broader economic and electoral narrative.

USTR Opens New Section 301 Investigation into Germany's Pharmaceutical Pricing

On June 18, 2026, U.S. Trade Representative Jamieson Greer initiated a new investigation under Section 301 of the Trade Act of 1974 targeting Germany. The inquiry examines whether Germany's persistent underpayment for innovative pharmaceutical products is unreasonable or discriminatory and whether it burdens or restricts U.S. commerce.

At the heart of the investigation are allegations that Germany's drug pricing and reimbursement policies, including a recently proposed plan to reduce pharmaceutical spending, suppress the prices paid for innovative medicines. USTR contends that these practices shift a disproportionate share of global pharmaceutical research and development costs onto U.S. patients and payers, undercutting American innovators.

The Federal Register notice formalizing the investigation was published on June 24, 2026. Key dates for stakeholders include: June 25, 2026, when USTR opens the docket for written comments; August 10, 2026, the deadline for written comments, requests to appear at the hearing, and summaries of testimony; and September 22, 2026, when USTR will hold a public hearing on the investigation.

This action marks the latest standalone Section 301 initiation, following USTR's June determinations and proposed tariffs in the Brazil and multi-country forced-labor investigations launched earlier this spring. Importers and pharmaceutical-sector stakeholders with German supply-chain exposure should monitor the docket closely and consider whether to participate in the comment process or the September hearing.

Supreme Court Denies Cert in Section 301 China Tariffs Litigation, Ending Importers' Refund Hopes

On June 15, 2026, the U.S. Supreme Court denied the petition for a writ of certiorari in HMTX Industries, LLC v. United States (No. 25-1012), bringing the long-running challenge to the 2018-2019 Section 301 tariffs on Chinese-origin goods to a close. The denial leaves intact the Federal Circuit's September 25, 2025 decision upholding the legality of the List 3 and List 4A duties and effectively forecloses refund claims for the thousands of importers who paid those duties.

Background

The litigation, consolidated in the Court of International Trade as In re Section 301 Cases, challenged the U.S. Trade Representative's authority to expand the original Section 301 action against China. USTR initially imposed duties on roughly $50 billion in Chinese goods, then relied on its modification authority under Section 307 of the Trade Act of 1974 to add Lists 3 and 4A, covering an additional $320 billion or more in imports. Importers argued that an expansion of that magnitude exceeded the power to "modify" an existing action and that USTR failed to comply with the Administrative Procedure Act.

The CIT rejected the substantive challenges, and on September 25, 2025 the Federal Circuit affirmed, holding that Section 307(a)(1)(C) independently authorized the List 3 and 4A tariffs and that USTR satisfied APA procedures. The court of appeals also rejected the importers' nondelegation and major-questions arguments.

The Question Presented

The cert petition asked the Court to decide whether USTR's streamlined "modify" authority under Section 307 confers essentially unlimited power to expand the scope of an initial Section 301 action, as reflected in the roughly tenfold expansion at issue. After several extensions, the petition was filed February 20, 2026, the government's opposition followed, and the Court denied review on June 15, 2026 without comment.

What the Denial Means

A denial of certiorari is not a ruling on the merits, but its practical effect here is significant. With the Federal Circuit's judgment now final and conclusive, the List 3 and 4A Section 301 duties remain valid and importers who paid them are not entitled to refunds. This stands in contrast to the IEEPA "reciprocal" tariffs, which the Supreme Court struck down in February 2026 in the Learning Resources matter. The Section 301 tariffs on Chinese goods were never affected by that decision and continue in force.

23 Non-Importer States to Cross-Appeal CIT's Section 122 Standing Ruling

Twenty-three non-importer states have filed a notice of cross-appeal from the U.S. Court of International Trade's May 7, 2026 decision in State of Oregon v. United States (Ct. No. 26-01472), challenging the trade court's tariffs imposed under Section 122. The cross-appeal targets the CIT's decision to limit injunctive relief to only three parties.

The Narrow Injunction Below

In its May 7 ruling, the CIT granted injunctive relief only to Burlap and Barrel, Basic Fun, and the State of Washington, finding that those were the only plaintiffs with standing to contest the Section 122 tariffs. The court held that the remaining state plaintiffs failed to identify actual indirect harm resulting from the Section 122 duties, and on that basis denied them injunctive relief.

The Standing Question on Appeal

Practitioners view the cross-appeal as focused squarely on the standing analysis as applied to the 23 non-importer states excluded from the injunction. Notably, Washington -- the only state the CIT found to have standing -- is not among the cross-appellants. The non-importer states had advanced standing theories based on increased prices attributable to the Section 122 tariffs, and in some instances on being importers even where they did not themselves pay the duties.

Unless one or more of the states can show that they actually paid Section 122 duties, those standing theories may be difficult to sustain. Vendor correspondence attributing price increases to the tariffs may not, by itself, be enough to establish standing. The Federal Circuit may be hesitant to recognize standing premised on indirect tariff costs out of concern that doing so would open the floodgates to suits by parties only tangentially affected by the duties.

A Sovereign-Interest Theory

One rationale for the states' appeal is that, because Washington obtained standing, the other states may view themselves as having a responsibility to protect the financial interests of their citizens with respect to the disposition of tax dollars -- a potentially unique sovereign obligation that could support standing in cases of this type. Whether the Federal Circuit, or ultimately the Supreme Court, will expand standing doctrine to permit states to sue the federal government on this indirect-harm theory remains uncertain, and such an outcome appears unlikely though not impossible.

We will continue to monitor the Section 122 litigation and provide updates as the appeal proceeds.

This post is provided for informational purposes only and does not constitute legal advice.

Trump Threatens 100% Tariff on French Wine Over Digital Tax

President Donald Trump warned on Sunday that the United States would impose a 100 percent tariff on French wines and champagnes unless Paris eliminates its digital services tax on American technology companies, escalating trade tensions just as he arrived in France for the G7 summit.

In an interview with the New York Post published ahead of the summit, Trump said he had asked French President Emmanuel Macron to stop taxing American firms, warning that if France proceeds, he will have no alternative but to implement a 100 percent tariff on all champagnes and wines imported from France. He suggested the pressure would ease if Macron simply eliminated the tax.

The threat is not new terrain. In January, Trump warned of 200 percent tariffs on French wine to pressure Macron into joining his "Board of Peace" initiative on Gaza. And during his first term in 2019, his administration proposed tariffs of up to 100 percent on $2.4 billion worth of French goods, including wine, cheese, and handbags, after a U.S. Trade Representative investigation concluded that France's digital services tax discriminated against American companies.

The warning lands as the 52nd G7 summit opens in Evian-les-Bains, France. French officials had already scaled back their ambitions for the gathering, abandoning plans for a comprehensive final communique in favor of narrower joint statements on topics such as critical minerals, migration, and drug trafficking, and Trump is reportedly expecting a chilly reception among European counterparts.

France's digital services tax, first enacted in 2019, levies a 3 percent charge on revenues generated in France by large technology firms, predominantly American companies such as Alphabet, Meta, and Amazon. Paris has long argued the tax addresses a gap in international rules that allows tech giants to earn substantial revenue in countries where they pay little corporate tax. By tying punitive wine tariffs to repeal of the tax, Trump places one of France's most iconic exports at the center of a long-running dispute, setting a combative tone for the days ahead and renewed uncertainty for French exporters and U.S. importers.

Active USTR Section 301 Investigations: Status & Timelines (May 2026)

As of May 2026, USTR has an unusually large and aggressive portfolio of active Section 301 investigations spanning dozens of trading partners and covering issues from manufacturing overcapacity to forced labor, digital services taxes, semiconductor dominance, and geopolitical trade abuses. The current wave is principally driven by the Trump Administration's use of Section 301 as a replacement vehicle for IEEPA tariffs following the Supreme Court's invalidation of the IEEPA-based "reciprocal tariffs."

USTR Ambassador Jamieson Greer has explicitly committed to an accelerated investigation timeline with the goal of having Section 301 tariffs in place before the temporary Section 122 bridge tariffs expire on July 24, 2026.

The current USTR Section 301 portfolio as of May 2026 consists of 13 active or recently completed proceedings, plus two pending petitions and several anticipated future investigations.

Group 1: New 2026 Mega-Investigations (Highest Priority)

• Structural Excess Capacity in Manufacturing — Initiated March 11, 2026, targeting 16 economies (including China, EU, Japan, India, Mexico, Vietnam, and South Korea). Covers steel, semiconductors, EVs, and chemicals. Hearings concluded May 8, 2026; determination expected by July 24, 2026.

• Failure to Enforce Forced Labor Prohibitions — Initiated March 12, 2026, targeting 60 economies representing over 99% of U.S. imports. Hearings concluded May 1, 2026; action expected on or before July 24, 2026.

Group 2: Ongoing Single-Country or Sector-Specific Investigations

• China Semiconductors — Determination issued December 2025. Tariffs currently 0%, with an increase scheduled for June 23, 2027.

• China Phase One Agreement — Initiated October 24, 2025; currently in the post-hearing determination phase.

• Brazil (digital trade, tariffs, IPR, etc.) — Initiated July 15, 2025; currently in the post-hearing

  phase.

• Nicaragua (labor / human rights) — Determination issued December 2025. Tariff schedule:

  0% (2026), 10% (2027), 15% (2028).

• China Maritime / Shipbuilding — Fees suspended through November 9, 2026, following a U.S.-China trade deal.

Group 3: Legacy Investigations

• Digital Services Taxes (DSTs) — Renewed February 2025 against France, Austria, Italy, Spain, Turkey, UK, and Canada. Under review for potential formal Section 301 action.

• EU Large Civil Aircraft (Airbus) — Active; tariffs remain in force on EU goods.

• China Forced Tech Transfer — Ongoing enforcement of original Section 301 tariffs (Lists 1–4).

• Vietnam Currency Practices — Status is "dormant/unresolved," though a bilateral agreement was signaled.

• Vietnam Timber — Resolved by bilateral agreement; effectively closed.

• EU Beef — Active; managed through negotiated tariff-rate quotas.

Pending and Anticipated Actions

• Pending petitions — Korea's Coupang data practices and Mexico's seasonal agricultural products.

• Anticipated investigations — USTR has signaled potential future investigations into pharmaceutical pricing, digital protectionism (EU/Canada), and a Vietnam IP investigation.

Where countries may become subject to the multiple 301 orders, tariffs would overlap (i.e., “stack”).

The administration has adopted an accelerated procedural timeline so that the new 301 measures are in place before the Section 122 "bridge" tariffs expire on July 24, 2026.

Section 301 Investigations: Where Things Stand and What's Coming Due

U.S. Trade Representative Jamieson Greer continues to wield Section 301 of the Trade Act of 1974 as the administration's principal long-term tariff tool — complementing, and in some respects outlasting, the IEEPA tariffs now in litigation. Three Section 301 tracks are currently active, each on its own statutory clock. Below is a snapshot of where each investigation stands and when importers should expect concrete tariff action.

1. Maritime, Logistics, and Shipbuilding (China)

The Biden-initiated Section 301 investigation into China's targeting of the maritime, logistics, and shipbuilding sectors carried forward into the Greer USTR. Phase 1 port-call fees on Chinese-built and Chinese-operated vessels took effect October 14, 2025, with scheduled annual escalators through 2028. USTR's Phase 2 proposal — covering ship-to-shore (STS) cranes, chassis, and related cargo-handling equipment — drew a public hearing in spring 2026 and post-hearing rebuttal comments closed earlier this spring. A final Phase 2 determination is expected in mid-2026, with duties likely to be phased in beginning Q3 2026. Importers of port equipment should plan for cumulative duties potentially reaching 100% on Chinese-origin STS cranes.

2. Legacy Chinese Semiconductors

USTR's Section 301 investigation of China's acts, policies, and practices related to legacy (mature-node) semiconductors was initiated in late 2024 and continues under the current administration. The statutory 12-month investigation window closes in 2026, and USTR has indicated it intends to issue findings and a proposed remedy before the deadline. Expect a Federal Register notice proposing tariffs on downstream products containing Chinese legacy chips — automotive, medical device, and consumer electronics imports are squarely in scope. A public hearing on any proposed action will follow before final implementation.

3. Nicaragua

The Section 301 investigation of the Government of Nicaragua concerning labor rights, human rights, and rule of law was initiated in 2024 and remains pending. The administration has signaled that suspension or termination of CAFTA-DR benefits for Nicaragua is on the table as a 301 remedy. Apparel and agricultural importers sourcing from Nicaragua should treat the loss of CAFTA-DR preference as a realistic near-term risk and model duty exposure under MFN rates.

Key Deadlines to Watch

- Maritime/Shipbuilding Phase 2 final determination: expected mid-2026; implementation Q3 2026.

- Legacy semiconductors: statutory deadline for investigation conclusion in 2026; proposed action and hearing to follow.

- Nicaragua 301: no fixed statutory deadline, but action consistent with the administration's broader hemispheric trade posture is anticipated within 2026.

What Importers Should Be Doing Now

First, map exposure. Identify HTSUS classifications and country-of-origin determinations for all products that could be swept into any of the three 301 tracks — including downstream goods incorporating Chinese legacy chips. Second, prepare comments. USTR's 301 proceedings are notice-and-comment processes; well-documented submissions on supply-chain availability, pricing, and national-security considerations meaningfully shape exclusion frameworks. Third, consider exclusion strategy. Past 301 actions have included product-specific exclusion processes, and early engagement with USTR staff and counsel typically improves outcomes. Fourth, model duty stacking. Section 301 duties apply on top of MFN, AD/CVD, and IEEPA tariffs; cumulative rates can quickly exceed 100% ad valorem.

Unlike the IEEPA tariffs — now subject to Supreme Court review and a narrowing injunction from the CIT — Section 301 rests on settled statutory authority and a developed administrative record. Whatever the fate of IEEPA, Section 301 will remain the workhorse of U.S. tariff policy through the remainder of this administration. Importers who treat the current comment windows as their last meaningful opportunity to influence outcomes will be best positioned for what comes next.

Nakachi Eckhardt & Jacobson advises importers across all three pending 301 tracks. Contact us to discuss exposure assessments, comment strategy, and exclusion requests.

$549.5 Million False Claims Act Settlement Signals Aggressive DOJ Enforcement Against Duty Evasion

On May 12, 2026, the Department of Justice reported having secured one of the largest customs-related False Claims Act recoveries to date — a $549.5 million settlement with two importers and four affiliated warehousing entities accused of evading antidumping and countervailing duties (AD/CVD) on Chinese-origin aluminum extrusions. According to DOJ, the defendants imported more than 2.2 million aluminum extrusions from China and disguised them as finished merchandise by spot-welding the extrusions together to give the appearance of functional pallets. By presenting the goods as finished pallets rather than extrusions, the importers sought to sidestep AD/CVD orders that would otherwise apply.

The False Claims Act imposes civil liability on importers who knowingly (1) make or use false records material to a duty obligation, or (2) conceal or improperly avoid an obligation to pay duties to the U.S. government. Damages can reach up to three times the amount withheld, plus additional penalties. The FCA's qui tam provisions also empower private whistleblowers to file suit on behalf of the United States and share in any recovery — a feature that has driven a growing pipeline of customs-fraud cases. The matter was handled by DOJ's Civil Division through its Trade Fraud Task Force, which targets tariff evasion and smuggling of prohibited goods. DOJ has reaffirmed that FCA actions remain a centerpiece of its strategy to combat import fraud.

USTR Greer: Tariffs on Canada, Mexico, and China Are Here to Stay

U.S. Trade Representative Jamieson Greer used a recent series of public appearances to deliver a single, unmistakable message: tariffs are now a permanent feature of U.S. trade policy, and neither USMCA partners nor China should expect a return to the pre-tariff status quo.

Tariffs Tied to the Trade Deficit

At a Tuesday forum, Greer said, "We're going to have tariffs as long as we have a giant trade deficit," adding that the administration has spent "the past year and a half going to countries telling them we have to have some level of tariff." The remarks represent the clearest statement yet that Canada and Mexico should not expect a return to duty-free trade under the U.S.-Mexico-Canada Agreement, even as formal renegotiations of the pact are underway. Greer also indicated that the administration has particular trade concerns with Canada.

Tariffs Are Still Key to US Policy

On broader tariff architecture, Greer signaled the partial end of Most Favored Nation treatment, saying MFN will continue for some products but that in "agriculture and sensitive industrial sectors, it will end," because the United States "should be able to treat countries in different circumstances differently."

North American Tariffs - Despite USMCA

At the same Tuesday forum in Washington — held one day before Greer's departure for Mexico City to begin the first formal bilateral round of the USMCA joint review — Greer made clear that U.S. tariffs on Mexico and Canada are not going away in the near term. Reiterating that "we're going to have tariffs as long as we have a giant trade deficit," he tied continued North American tariffs directly to the administration's deficit-reduction objective rather than to the outcome of the USMCA review itself.

Greer also used the forum to outline how the USMCA negotiations will be shaped by tariff policy. He said the talks would address rules of origin "in a way that increases U.S. content" in North American products, and would focus on coordinating external tariffs to keep Chinese goods from entering U.S. supply chains through Canada and Mexico. He pointed approvingly to Mexico's recent imposition of roughly 1,400 tariffs on countries with which it does not have free trade agreements as an example of the kind of external-tariff alignment the United States is seeking.

At the same time, Greer floated the possibility of preferential tariff treatment within North America if Canada and Mexico cooperate on those external tariffs, framing regional supply chains as a national security priority and stating that he wants U.S. supply chains "to be sourced from this hemisphere." He indicated that negotiations with Mexico are progressing more smoothly than those with Canada, expressed continuing frustration over Canada's retaliatory tariffs from last year, and warned that talks over the future of Canada's auto sector are likely to be difficult, even as cooperation in energy, minerals, and fertilizers remains largely tariff-free.

Elevated Duties in China is a New Baseline

On China, Greer was equally direct. He described current tariff rates on Chinese goods as falling in the 35-50 percent range depending on product, compared with a 10-15 percent baseline applied to most other trading partners, and stressed that the United States retains the ability to push rates back up to higher "Busan deal" levels if needed.

In public remarks, Greer underscored that “duties are here to stay,” framing tariffs on China as a permanent feature of U.S. policy rather than a temporary negotiating tool. In testimony before the House Ways and Means Committee, he also downplayed the prospect of a broad exclusion process, signaling that importers should not expect large-scale carve-outs.

A New Board of Trade and Section 301 Tariffs in the Future

A forthcoming Federal Register notice, tied to the new U.S.-China Board of Trade, will be used to determine which products fall into that lower-tariff tranche.

Greer also confirmed that recommendations from ongoing Section 301 investigations will be released in the "coming months" via Federal Register notice. While the President is not interested in "exclusions," Greer said the specific goods targeted by Section 301 tariffs could still be "shaped by the input" gathered through public comments - an important opening for importers and domestic producers to weigh in.

CBP Reports $20.6 Billion in IEEPA Refunds Disbursed via CAPE, Concedes $10 Billion Error; Judge Eaton Summons Commissioner

On May 26, 2026, U.S. Customs and Border Protection (CBP) filed an updated declaration in Euro-Notions Florida, Inc. v. United States, Ct. No. 25-00595 (CIT), describing the agency's progress in administering refunds of IEEPA duties through its new Consolidated Administration and Processing of Entries (CAPE) functionality in ACE. The declaration of Brandon Lord, Executive Director of CBP's Trade Programs Directorate, reports meaningful progress but concedes a significant prior misstatement of refund figures. The full status report is available here: https://www.dropbox.com/scl/fi/phw7bs6lab483d4hla4ra/20260526-Lord-status-report.pdf?rlkey=qglb9m26hcgb186nhx8avbnkj&dl=0

According to the May 26, 2026 declaration of Brandon Lord, as of May 22, 2026 approximately $85 billion in potential and certified IEEPA refunds had been accepted for processing through CAPE, and roughly $20.6 billion (duties plus interest) had already been certified by CBP and transmitted to Treasury for disbursement. The declaration also concedes that CBP's earlier May 12, 2026 anticipated-refund figure was overstated by approximately $10 billion due to an "inadvertent error in the data query" — the correct number should have been about $25.46 billion, not $35.46 billion.

Judge Eaton Orders the Commissioner to Appear. Separately, Judge Richard K. Eaton has ordered the Commissioner of CBP to appear personally before the Court of International Trade to explain the agency's administration of the refund program. That order signals that the court views the prior misstatement and the overall pace and accuracy of refunds as serious enough to require accountability at the top of the agency, rather than through staff-level declarations alone. The Commissioner can expect to be questioned on (i) the cause of the $10 billion data-query error, (ii) the internal controls now in place to prevent recurrence, (iii) CAPE's performance and the reasons for failed validations and outstanding refunds, and (iv) CBP's plan to ensure all eligible importers receive timely duty and interest refunds in compliance with the court's prior orders.

What Importers Should Do. Importers with significant IEEPA exposure should (1) confirm that all eligible entries have been or will be covered by a CAPE declaration within CBP's 90-day reliquidation window, (2) verify that Chapter 99 HTSUS coding and other entry data align with CAPE validation requirements, (3) ensure ACH banking information and any CBP Form 4811 designations are current so that completed refunds reach Treasury without delay, and (4) continue to monitor the Euro-Notions docket as Judge Eaton's hearing with the Commissioner approaches, since further court directives are possible.

We will continue to track CBP's CAPE reporting and the court's oversight of the refund program, and will update this blog as additional declarations, orders, and the Commissioner's appearance develop the record.

Supreme Court Opens the Door to Negligent-Hiring Claims Against Freight Brokers

The Supreme Court's unanimous decision in Montgomery v. Caribe Transport II, LLC is a major development for brokers, shippers, carriers, and insurers because it removes a preemption defense that had blocked negligent-hiring and negligent-selection claims in some jurisdictions. Across transportation-focused law firm alerts and trade coverage, the emerging consensus is that the decision does not make brokers automatically liable for every crash, but it does make broker vetting practices, internal policies, and documentation central to future litigation.

What the Court Held

In Montgomery, the Court held that a state common-law claim alleging that a broker negligently hired an unsafe motor carrier falls within the safety exception to the Federal Aviation Administration Authorization Act of 1994 (FAAAA). The FAAAA broadly preempts state laws related to a broker's prices, routes, or services, but it also preserves a state's safety regulatory authority with respect to motor vehicles. Writing for a unanimous Court, Justice Barrett reasoned that requiring a broker to exercise ordinary care in selecting a carrier "concerns" the motor vehicles used to transport freight, bringing negligent-hiring claims within the statutory exception.

That holding reverses the Seventh Circuit and resolves a long-running split over whether such claims were categorically preempted. Before Montgomery, broker defendants often relied on favorable precedent in some circuits to argue that negligent-selection claims interfered with federally protected broker services and therefore could not proceed under state law. The Court has now largely closed that route.

The Converging View from Industry Alerts

The common thread across recent alerts is that the decision expands exposure but stops short of imposing strict liability on brokers. Firms covering the decision are emphasizing three points.

First, negligent-hiring and negligent-selection suits against brokers are expected to increase because plaintiffs no longer face the same threshold preemption obstacle in many cases. Second, the ordinary elements of negligence still matter, especially whether the broker had reason to know of safety problems and whether the alleged vetting failure proximately caused the injury. Third, courts and litigants are likely to focus heavily on the broker's actual carrier-selection process rather than abstract arguments about federal deregulation policy.

That framing aligns with the concerns flagged in Justice Kavanaugh's concurrence, joined by Justice Alito. The concurrence acknowledged the brokers' concerns about litigation costs and economic effects as "legitimate and weighty," while concluding that any broader shield from state tort suits must come from Congress rather than judicial expansion of preemption. For regulated parties, that means the operational response matters now even if the legislative debate continues.

Why Broker Vetting Now Matters More

The immediate practical consequence of Montgomery is that broker due diligence will move to the center of discovery and trial strategy. Plaintiffs will likely seek internal carrier-approval criteria, onboarding checklists, training materials, emails, exception approvals, and records showing what FMCSA data was reviewed before the load was tendered.

That means brokers should revisit whether their written procedures are specific enough to be defensible and simple enough to be followed consistently. Policies that reference safety review in general terms but do not define escalation triggers, disqualifying indicators, or exception authority may create unnecessary litigation risk if personnel apply them unevenly. A well-documented vetting record will not eliminate claims, but it will be far more useful than relying on a preemption argument that no longer carries the same force.

Contract and Insurance Implications

Another theme emerging from post-decision commentary is that contract language and insurance structure will receive renewed attention. Broker-carrier agreements are likely to include more detailed safety representations, notice obligations for rating downgrades or serious violations, audit rights, and more pointed indemnity language directed to loss arising from unsafe operations.

Insurers are also likely to scrutinize underwriting submissions more carefully, especially where a broker uses smaller carriers, high-risk lanes, expedited loads, or carriers with mixed safety histories. Even where coverage remains available, the market may respond with higher premiums, tighter exclusions, or more detailed questions about vetting controls and record retention. Shippers may feel the impact as well, whether through revised service agreements, more robust compliance certifications, or rate adjustments reflecting increased liability and defense costs.

What Transportation Stakeholders Should Do Now

For brokers, the most immediate step is to test whether current carrier-selection practices match what internal manuals and contracts say they require. For shippers, this is the right time to review how broker agreements allocate responsibility for carrier screening, information sharing, indemnity, and insurance. For carriers, the case is another reminder that publicly visible safety performance can affect not only enforcement exposure but also access to freight.

The broader lesson from Montgomery is straightforward: the litigation focus has shifted from whether a negligent-hiring claim may be filed to whether the broker's conduct was reasonable under the circumstances. In that environment, companies that can show disciplined vetting, clear escalation standards, and consistent documentation will be better positioned than those still relying on old assumptions about FAAAA preemption.

CIT Strikes Down Section 122 Global Tariff; Narrow Injunction Limits Immediate Relief to Three Plaintiffs

On May 7, 2026, the U.S. Court of International Trade held that the President's 10% global tariff imposed under Section 122 of the Trade Act of 1974 was unlawful. The decision — brought by importers Burlap and Barrel and Basic Fun, together with the State of Washington — turns on a textual reading of Section 122 and represents the first significant judicial check on the use of that statute as a vehicle for broad-based tariff policy. The government filed notices of appeal to the U.S. Court of Appeals for the Federal Circuit the following day, May 8, 2026.

What Section 122 Authorizes

Section 122 of the Trade Act of 1974 (19 U.S.C. § 2132) permits the President to impose temporary import surcharges of up to 15 percent ad valorem, or quantitative restrictions, to address "large and serious United States balance-of-payments deficits." Any such surcharge is limited to 150 days unless extended by Act of Congress and must be applied on a nondiscriminatory basis.

The Court's Holding

In a 2-1 decision authored by Judges Mark Barnett and Claire Kelly, with Judge Timothy Stanceu dissenting, the Court concluded that the President improperly invoked Section 122 to address trade and current account deficits rather than the balance-of-payments deficits the statute actually contemplates. The Court held that those concepts are not interchangeable and that the predicate findings underlying the 10% global tariff did not satisfy Section 122's statutory trigger.

The Court entered a permanent injunction against collection of the Section 122 duties — but only as to the three plaintiffs before it. The injunction takes effect after five days. The tariffs remain in force as to all other importers pending appeal.

Why This Matters for Importers

1. The Injunction Is Narrow. The Court's relief runs only to Burlap and Barrel, Basic Fun, and the State of Washington. Other importers do not receive automatic refunds or non-collection by virtue of the decision. Importers seeking relief must affirmatively preserve their own rights.

2. Preserving Refund Rights. Importers who have paid Section 122 duties should review their entry summaries and consider available preservation mechanisms, including protests under 19 U.S.C. § 1514 within 180 days of liquidation and, where appropriate, direct CIT actions. The procedural pathway depends on the liquidation posture of each entry.

3. Appeal Posture. The government has already filed its notices of appeal to the Federal Circuit. The scope and timing of any nationwide relief will depend on how the Federal Circuit treats the merits and whether any stay is entered.

4. Statute-Specific Reasoning. The Court's analysis is grounded in the text of Section 122 and the distinction between balance-of-payments deficits and trade or current account deficits. The reasoning does not automatically extend to tariffs imposed under other statutes (e.g., Section 232, Section 301, or IEEPA), each of which is governed by its own framework and its own pending litigation.