Court of International Trade Holds That Section 122 Tariffs Are Impermissible, But Limits Relief to Specific Importers

On Thursday, May 7, 2026, in State of Oregon vs. United States (Slip Op. 26-47), the Court of International Trade (“CIT”) issued an order holding – by a vote of 2 to 1 – that tariffs imposed by President Trump under Section 122 of the Trade Act of 1974 (“Section 122”) are impermissible.  However, as noted below, relief was limited to the specific litigants who act as importers of record, and we expect the government to swiftly file an appeal at the Court of Appeals for the Federal Circuit (“Federal Circuit”). 

As background, President Trump announced the Section 122 tariffs in February after the Supreme Court ruled that the government cannot impose tariffs under the International Economic Emergency Powers Act (“IEEPA”) in Learning Resources, Inc. vs. Trump.   Currently at 10%, Section 122 tariffs are temporary, unless extended by Congress.  Specifically, the President can impose them for up to 150 days unless extended, or in this case, until July 2026.  Importers and certain states challenged the legality of the tariffs almost immediately at the CIT, leading to the recent decision. 

Unlike the IEEPA dispute, there was no question that Section 122 permits tariffs to be imposed. Here, the CIT evaluated whether the President met the standard for triggering the statute’s use.  In the majority, Judges Barnett and Kelly decided that the President did not have a factual basis to trigger the powers of Section 122, essentially holding that the President needed to identify a balance of payments deficit and that a balance of trade deficit or a current account deficit do not meet the statutory requirement.  In dissent, Judge Stanceu argued that the statute is broad and can permit a balance of trade deficit to qualify as a balance of payments deficit.  The arguments turn on statutory interpretation and legislative history, as Congress considered different versions of the law before passing it. 

The CIT limited relief to the specific parties involved in the litigation who are importers of record, including the State of Washington.  That means, unless and until the Federal Circuit issues any contrary relief, only these specific importers will have the rights to refunds and will not need to pay any further Section 122 tariffs. 

What Should Importers Do Now

We fully expect the government to appeal the decision to the Supreme Court of the United States, if necessary, but first we can expect the issues to be addressed in more detail by the Federal Circuit (and perhaps en banc, given the implications of any decision).   

In the meantime, all other importers will continue to pay Section 122 tariffs on applicable imports. It is also not yet clear if the CIT will pause all other Section 122 cases until any appeals in the current case are decided.  Other importers may want to file at the CIT for similar relief, as universal relief was not sought by these plaintiffs, and will not be made available until or unless the Federal Circuit or another reviewing court steps in and changes the current status quo here or in any similar Section 122 case. 

Honigman’s Tariff Task Force continues to monitor the litigation and will provide further updates as they develop.