In a lengthy April 10, 2026 hearing, a three-judge panel of the U.S. Court of International Trade (Judges Barnett, Kelly, and Stanceu) subjected the government and the plaintiff states and importers to sustained questioning over President Trump's use of Section 122 of the Trade Act of 1974 to impose a 10% global tariff under Proclamation 11012. The questioning focused in particular on what Congress meant by "large and serious United States balance-of-payments deficits." The government defended the tariffs on the theory that the President may select the current account as the relevant balance-of-payments measure, while plaintiffs contended that Section 122 was intended for circumstances in which U.S. reserve assets are threatened in defending fixed exchange rates, not simply when there is a trade or current-account deficit.
Judge Stanceu pressed both sides on the contemporaneous understanding of balance-of-payments concepts in 1974, including whether Congress was concerned with deficits measured on a "liquidity basis" and whether the statutory reference to "deficits" in the plural signals that Section 122 should be reserved for persistent, multi-year imbalances rather than routine trade deficits. The panel also explored whether the government's reading effectively eliminates meaningful guardrails, since one segment of the balance of payments will almost always be in deficit, and whether the President could invoke Section 122 based on a goods-trade deficit even where that deficit is offset by surpluses elsewhere in the accounts.
The judges devoted significant attention to Section 122's threshold requirement that "fundamental international payments problems require special import measures to restrict imports," probing whether that language is merely descriptive of the specific problems listed in the statute or operates as an additional precondition the President must satisfy. Judge Kelly in particular suggested that, by analogy to a medical diagnosis triggering a range of treatments, identification of a "fundamental international payments problem" functions as the initial trigger for Section 122 authority, while addressing a balance-of-payments deficit is better understood as a remedy. The panel further questioned whether Section 122 was intended to address global imbalances at the worldwide level and how that fits with today's floating exchange-rate regime.
Remedies and justiciability also featured prominently. The plaintiff states argued that after-the-fact refunds would be inadequate because they are indirect purchasers who experience tariff costs through higher prices rather than duties they pay directly. The judges probed whether such economic-incidence theories of standing "prove too much" by effectively allowing anyone affected by higher prices to sue at the CIT, and raised concerns about redressability where price effects are mediated by contracts and market competition. The panel also discussed the implications of the Supreme Court's decision in Trump v. CASA for nationwide relief, with plaintiffs contending that CASA's constraints on universal injunctions do not apply in the same way to the CIT's nationwide jurisdictional statute.
Oregon v. United States, Ct. Int'l Trade No. 26-01472, and Burlap and Barrel, Inc. v. United States, Ct. Int'l Trade No. 26-01606, remained pending after the hearing, but the argument underscored the court's skepticism about an open-ended construction of Section 122 and its willingness to scrutinize both the statutory preconditions and the appropriate form of relief. For importers and state plaintiffs seeking refunds or prospective relief from the 10% global tariffs, which are set to expire on July 24, 2026 absent congressional extension, the court's ultimate interpretation of "balance-of-payments deficits" and "fundamental international payments problems" will be central to whether Section 122 can sustain the administration's actions.
Update: On May 7, 2026, the CIT ruled the Section 122 tariffs unlawful. Read the full decision here.