Court of International Trade Panel Strikes Down Section 122 Tariffs, Throws Out Most State Suits

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May 8, 2026
By: Ashley J. Bodden

On May 7, 2026, the U.S. Court of International Trade (CIT) issued a decision finding that Section 122 does not provide the authority the Trump Administration attempted to invoke to impose broad-based tariffs. In State of Oregon et al. v. Trump and related consolidated actions, the CIT held that the Trump Administration exceeded its statutory authority in imposing a 10% global tariff surcharge under Section 122 and ordered collections halted as to the importing plaintiffs in those cases.

Following the Supreme Court’s February 2026 decision invalidating tariffs imposed under the International Emergency Economic Powers Act (IEEPA), the Trump Administration invoked Section 122 to impose a temporary 10% tariff surcharge on nearly all imports entering the United States. Section 122 authorizes the President to impose temporary import restriction of up to 15% for up to 150 days when “fundamental international payments problems” exist, including serious deficits or imminent depreciation of the U.S. dollar. The Trump Administration justified the tariffs on the United States’ trade deficit and broader economic concerns. Multiple states and private importers challenged the tariffs, arguing that Section 122 was never intended to authorize broad global tariffs based solely on ordinary trade deficits.

In a split decision, a CIT three-judge panel ruled that the Trump Administration’s use of Section 122 tariffs were “invalid” and “unauthorized by law.” The majority emphasized that Congress enacted Section 122 to address limited balance-of-payments emergencies during a very different and specific international monetary environment. Under the majority’s reading, that environment shaped the meaning of the term “balance of payments deficits” in the law. The majority found that the conditions invoked by the Trump Administration were not “balance of payments” under the law and therefore, could not support imposing duties under the law.

The CIT declined to issue a nationwide injunction. However, a permanent injunction applies to the successful private parties and the State of Washington (the “importing parties”). Therefore, Section 122 collections will continue as to all other importers pending the already filed appeals.

It should be noted that there was a dissenting opinion in the case that laid out the likely path for an appeal. The dissent argued that there were technical defects in the decision to issue a decision at this point, as well as arguing that the majority’s findings regarding the meaning of “balance of payments deficits” was unsupported. It is entirely possible that on appeal the court will use either of these rationales to overturn the decision.

With respect to the remainder of the importing community, at this moment there is likely no danger that any future Section 122 refunds will be lost. A court case similar to the successful cases discussed above need not be brought until early March 2028 (and in some cases, later). For the moment, most importers would benefit from waiting to see whether the case is appealed and whether the appeals court chooses to resume collections. At that point options and consequences will be more clear.

Finally, and interestingly (to us), the court found that the state lawsuits alleging only indirect harm from tariffs (i.e., they probably paid more for goods because of tariffs) lacked standing and dismissed the cases. This is also the likely outcome for any suits filed under any tariff regime on behalf of non-importing consumers of the imported goods. Since several states have, or allegedly will, file such claims this is an interesting precedent.

Importers should discuss with counsel steps needed to take to ensure their interest regarding refunds is protected. To do so, contact any attorney  at Barnes, Richardson & Colburn, LLP.