On the afternoon of May 7, 2026, the U.S. Court of International Trade (CIT) issued a significant decision invalidating the Trump Administration’s 10% global tariff imposed under Section 122 of the Trade Act of 1974. In State of Oregon et al. v. United States and companion cases, the court granted summary judgment for certain importer plaintiffs and permanently enjoined enforcement of the tariffs as unlawful. The Court found that only importers and not states had standing to challenge this action and limited the relief to those importer plaintiffs in Court. This relief, while precedential, does not apply at this time to anyone not in this court case. In order to benefit, it appears that entities will need to file their own case seeking similar relief. 

This decision sharply limits presidential authority to impose tariffs under Section 122 – a section of the Trade Act that the President was reliant upon after the U.S. Supreme Court struck down IEEPA tariffs in February 2026.   

The Section 122 Tariffs at Issue 

The case challenged Proclamation No. 11012, which imposed a 10% ad valorem tariff on most imported goods beginning February 24, 2026. 

The administration justified the tariffs under Section 122, which allows temporary import surcharges (up to 15%) to address “fundamental international payments problems,” including “large and serious United States balance-of-payments deficits.” 

To support the tariffs, the Proclamation relied on: 

  • A ~$1.2 trillion U.S. trade deficit recorded in 2025 
  • A current account deficit of ~4% of GDP 
  • A sharply negative net U.S. international investment position 
  • Persistent income account imbalances 

The Court’s Key Holding: “Balance-of-Payments Deficits” Has a Narrow Meaning 

The central issue was whether these modern economic metrics satisfied Section 122’s statutory requirements. The CIT said no. 

The Reasoning 

The court held that “balance-of-payments deficits” is a term of art grounded in 1974 economic concepts, not a flexible modern standard. Because the Proclamation relied instead on current account and trade deficits, the court found it did not identify the statutory condition required to invoke Section 122.  

The Result 

The court concluded the President’s action exceeded delegated authority: 

  • The tariffs were not authorized by Section 122 
  • The Proclamation was therefore ultra vires 
  • . The duties imposed were unlawful 

The court also rejected the government’s argument that the President could rely on evolving economic concepts, warning that such a broad interpretation would lack an “intelligible principle” and raise constitutional concerns.  

Who Does This Help?  

The court found that only i) importers directly paying tariffs (including Burlap and Barrel and Basic Fun), and ii) the State of Washington (as an importer) had standing because they had a financial interest in imposed duties.  

The Court did not provide nationwide relief and limited the relief to those in the Court. Specifically, the court declined to issue a universal injunction and dismissed claims from more than 20 states that alleged indirect economic harm, finding a lack of standing.   

What Importers Should Do 

1. Assess Eligibility for Relief 

Importers who paid Section 122 duties should evaluate: 

  • Whether they can assert claims similar to those of the successful plaintiffs 
  • Whether entries remain protestable or subject to litigation 

2. Prepare for Refund Litigation 

Refunds are not automatic. Importers may need to: 

  • File protests or pursue litigation 
  • Monitor any appeals affecting finality 

3. Watch for Appeals 

The government is likely to appeal. The scope of relief—and whether tariffs remain suspended—may evolve quickly. 

4. Evaluate Exposure to Other Tariffs and Future Actions 

The ruling narrows Section 122 authority, but other statutes (e.g., Section 301, Section 232) remain available. 

Learn more: 

 

Print Friendly, PDF & EmailPrint