States Challenge Section 122 Tariffs

Mar. 9, 2026
By: Pietro N. Bianchi

A group of 24 States filed a complaint in the Court of International Trade challenging the legality of the Section 122 tariffs imposed by President Trump in the wake of the decision in Learning Resources v. United States, which struck down the IEEPA tariffs. Unsurprisingly and understandably, IEEPA refunds have been taking the spotlight away from Section 122. However, a 10% tariff (or will it be 15%?) on 150 days of imports will likely total a significant amount. A complaint against Section 122, which has been expected, was filed remarkably fast and given the overlap on some issues with the IEEPA case, the Section 122 case may be decided quickly (by legal standards). It will be prudent for importers to treat Section 122 tariffs with the same diligence provided to IEEPA tariffs.

The States alleged that President Trump illegally imposed the Section 122 tariffs because there is not “balance of payments problem.” The States allege that “balance of payments” is a statutory term incorporating an accounting term that consists of three components: the current account; the capital account; and the financial account. A trade deficit on its own is not a balance of payments deficit. Rather, it is a factor in determining the current account. The States allege that the balance of payments is approximately a deficit of 0.2 percent of United States GDP, “a rounding error,” when all three components are properly calculated and that it has not been possible to have a balance of payment problem since the U.S. dropped the gold standard for a floating exchange rate system.

The States also alleged that President Trump illegally imposed the Section 122 tariffs in a discriminatory manner. Specifically, the product exceptions and country exemptions provided by President Trump are contrary to Section 122’s requirement that tariffs “be applied consistently with the principle of nondiscriminatory treatment” and “of broad and uniform application with respect to product coverage.”

By the way, the states also note that they are uniformly direct importers of articles for use in State administration, as well as “indirect importers” who bear the cost of tariffs in purchased articles. The first status (i.e. importer of record) should be sufficient for the state to have standing before the CIT.

If you have questions about Section 122 tariffs, including litigation, do not hesitate to contact an attorney at Barnes Richardson, & Colburn LLP.