On March 5, 2026, 24 states filed a challenge to President Trump’s recent imposition of 10% global tariffs under Section 122 of the Trade Act of 1974 (1974 Act) in the U.S. Court of International Trade (CIT). The CIT again finds itself positioned to be the battleground for rounds of legal briefing and arguments related to the Trump administration’s tariff policies.
Background: Supreme Court IEEPA Tariff Ruling and New Section 122 Import Duties
On February 20, 2026, in the consolidated cases of Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc., the U.S. Supreme Court found the administration’s imposition of tariffs pursuant to the International Emergency Economic Powers Act (IEEPA) to be unconstitutional.
On the same day, President Trump invoked his authority under Section 122 of the 1974 Act, making a proclamation that imposes a 10% ad valorem import duty for a period of 150 days, with exceptions on certain goods. The Section 122 tariffs became effective on February 24, 2026, at 12:01 a.m.
States Challenge the Section 122 Tariff
On March 5, 2026, 24 attorneys general and governors joined together to file a lawsuit (States’ Complaint) in the CIT against President Trump, the United States Department of Homeland Security and Kristi Noem in her (now former) official capacity, and U.S. Customs and Border Patrol and Rodney Scott in his official capacity.
The States’ Complaint alleges two faults:
- The president’s proclamation imposing the Section 122 tariffs fails to meet statutory requirements of the 1974 Act; and
- The Section 122 tariffs are not applied “consistently,” which is required under the statute, given the large scope of carveouts and exceptions.
The Section 122 Tariffs Fail Statutory Requirements for Imposition
The States’ Complaint alleges that “the president cannot meet the statutory requirements of Section 122.” In support of this position, the states allege that the president is “contorting” what the phrase “balance of payments” means, and that the Congressional intent behind Section 122 was to address a balance of payments issue rooted in a currency crisis during a period where a “fixed-rate currency exchange system” was in place.
The Section 122 Tariffs are Applied Contrary to Language of the 1974 Act
The States’ Complaint alleges the Section 122 tariffs are being imposed with significant carveouts and exceptions. The 1974 Act requires that tariffs be “applied consistently with the principle of nondiscriminatory treatment” and “of broad and uniform application with respect to product coverage” with narrow exceptions permitted. The president’s 10% global tariff proclamation provided sweeping exemptions for certain goods from Canada, Mexico, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua.
What Importers of Record Should Expect
The Section 122 tariffs are set to expire on July 24, 2026, unless Congress votes to extend them, which is unlikely given the current political environment. The expectation is that the CIT will take an expedited approach to hearing arguments and ruling. However, any ruling is expected to be challenged by the losing party.
From a data and records perspective, importers of record should implement the same data hygiene patterns (e.g., ensure registration with ACE, confirm balance of Section 122 tariffs imposed and collected) we are recommending for pursuing IEEPA tariff refunds.
Your Guide Forward
Cherry Bekaert’s assembled cross functional team of tax, audit, accounting and advisory professionals is here to help guide you through Section 122 and IEEPA updates. Our professionals are staying informed of all the latest news to help you navigate tariffs. Stay up-to-date on tariffs by getting in touch with a member of our Tariff Consulting Services team.
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