U.S. Court of International Trade Finds Section 122 Tariffs Unauthorized

Alert

May 11, 2026

On May 7, 2026, the sitting three judge panel in the U.S. Court of International Trade (CIT) found the President’s proclamation instituting the temporary tariffs under Section 122 of the Trade Act of 1974 (1974 Act) was unauthorized. The consolidated cases The State of Oregon, et. al. v. United States, et. al., and Burlap and Barrel, Inc. et. al. v. United States, et. al., resulted in a permanent injunction on Section 122 tariffs, but only for three of the plaintiffs.

Background: Supreme Court IEEPA Tariff Ruling and New Section 122 Import Duties

In the wake of the Supreme Court of the United States (SCOTUS) finding that the previously imposed International Emergency Economic Powers Act of 1977 (IEEPA) tariffs were unconstitutional, President Trump invoked his authority under Section 122 of the 1974 Act. The day the SCOTUS ruling was released, the president imposed a broad 10% ad valorem import duty for a period of 150 days, with exceptions for certain goods. The Section 122 tariffs became effective on February 24, 2026, at 12:01 a.m. and, absent intervention, will remain in place through July 24, 2026.

Two groups have challenged the legality of the Section 122 tariffs:

The State of Oregon, et. al. v. United States, et. al.
Burlap and Barrel, Inc. et. al. v. United States, et. al.

Though the two cases have different plaintiffs and procedural histories, the CIT consolidated them for the purposes of a single disposition on May 7, 2026.

CIT Holding on Section 122 Tariffs

The CIT opinion and order were narrow in issuance and did not issue a blanket permanent injunction on the Section 122 tariffs for all those subjected to them. Rather, the CIT ruled:

The complaints of those states that were not importers were dismissed for lack of standing. Washington was the only state importer.
The President’s February 20, 2026 proclamation (Proclamation 11012) failed to meet the statutory requirements under Section 122 of the 1974 Act to allow the lawful implementation of tariffs.
As a remedy for the importer plaintiffs injuries, the court granted a permanent injunction against the imposition of the Section 122 tariffs.

Broader Implications of CIT’s Holding on Section 122 Tariffs

While the CIT’s ruling invalidated the Section 122 tariffs, it was plaintiff focused and did not:

Provide any remedy for importers that were not plaintiffs in the cases
Provide any remedy for parties indirectly affected by the Section 122 tariffs because of some downstream costs (e.g., passed through costs, loss of business, administrative burdens)
Provide any avenue for refunds of the Section 122 tariffs already imposed and collected on importers
Rule on other aspects of Proclamation 11012, such as whether the exemptions to the tariffs are legal

Without more, the Section 122 tariffs will continue to be imposed on importers that were not named plaintiffs in the lawsuits.

Useful Strategies To Move Forward

In general, despite the CIT finding that the Section 122 tariffs are unauthorized, the tariffs will continue to be imposed on qualifying imported goods. Importers should execute practices similar to those recommended immediately after SCOTUS determined that the IEEPA tariffs were unconstitutional:

Track deadlines around protests for entries subjected to the Section 122 tariffs
Seek legal counsel to understand how to preserve your rights
Understand your tariff footprint (amount of Section 122 tariffs paid, entries on which the tariffs were imposed)

Similarly, parties that have borne the economic cost of the Section 122 tariffs but are not importers themselves should take steps to identify and quantify their exposure and review legal agreements with suppliers around pricing refunds and tariff adjustments.

Your Guide Forward

Cherry Bekaert established a cross-functional team of professionals to help advise and support our clients with the downstream effects when tariffs and tariff refunds impact tax, accounting, audit and financial reporting functions.

If you have questions about preserving your rights or any other legal or trade implications, we recommend reaching out to appropriate legal counsel.

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