Section 122 Tariffs Struck Down by U.S. Court of International Trade

What Importers Should Know

On May 7, 2026, the U.S. Court of International Trade issued an important decision regarding Section 122 tariffs, ruling in a 2-1 split decision that the tariffs are unlawful. For importers, customs brokers, freight forwarders, and businesses involved in international trade, this ruling is significant. However, it is equally important to understand what the decision does and does not do at this stage.

While the court found the Section 122 tariffs unlawful, the ruling does not automatically remove these tariffs for every importer, nor does it immediately create a universal refund process for all businesses that may have paid them.

What the Court Decided

The U.S. Court of International Trade reviewed whether the President’s proclamation imposing Section 122 tariffs—the recent 10% tariff on most imports—met the legal requirements established under Section 122. According to the analysis provided by NCBFAA Customs Counsel and Legislative Advisor of Sandler, Travis & Rosenberg, P.A., the majority held that the President failed to identify balance-of-payments deficits within the meaning of Section 122 as it was enacted in 1974.

In its reasoning, the court noted that the proclamation identified several economic concerns, including a large trade deficit, a current account deficit, a negative net international investment position, and deficits on the balance of primary and secondary income. However, the majority concluded that those factors did not equate to a “balance-of-payments” deficit as required under Section 122.

This distinction matters because the court was not simply reviewing whether the United States faces economic or trade-related challenges. Instead, it was examining whether the specific legal basis used to impose the tariffs matched the authority granted by Congress under Section 122.

The Ruling Is Not Universal

Although the majority ruled that the Section 122 tariffs are unlawful, the court did not issue a universal injunction. This means the ruling does not automatically apply to all importers.

Instead, the court issued a permanent injunction only for the named plaintiffs who are importers, including the State of Washington in its capacity as an importer. 

Why Refunds May Take Time

The majority also acknowledged the practical challenges that can arise when tariffs are found to be unlawful. The court referenced prior experience with tariff refunds, noting that there may be significant delays between the time tariffs are first held unlawful and the time refunds are actually issued.

This is a key point for importers. Even when a court decision appears favorable, the administrative process that follows can be complex. Customs and Border Protection guidance, appeal activity, injunctions, protests, and other administrative procedures may all affect how refund opportunities develop.

At this time, importers should watch for official guidance before taking action. Any potential refund strategy should be evaluated carefully, especially while the government’s expected appeal remains pending.

What Happens Next with the Trump Tariffs?

The federal government is expected to quickly appeal the decision and request a stay pending appeal. If a stay is granted, the practical effects of the ruling could be paused while the case continues through the appeals process.

In the meantime, Sheltered International will be watching for additional developments from the Court of International Trade, the appellate courts, and Customs and Border Protection. There may also be opportunities for affected importers to obtain injunctions or preserve potential refunds through available procedures, depending on how the case develops. However, those possibilities remain uncertain at this stage.

For Sheltered International clients, the most important takeaway is that no immediate action is required at this time. The Section 122 decision is a major development, but its current effect is limited, and further legal and administrative guidance is expected.

We are actively monitoring the situation for all clients and will continue to evaluate the impact and communicate any necessary next steps.

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