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.