Section 122 10% Global Tariff Faces Court Challenge — Could Trigger Second Refund Wave
If you've been paying the 10% Section 122 global baseline tariff since February 24, you might get that money back too.
On April 10, 2026, a three-judge panel at the US Court of International Trade heard oral arguments on whether the Section 122 tariff is legal. If they rule against the government, it would invalidate the second-largest tariff regime currently in effect — and trigger another massive refund cycle.
The Background
After the Supreme Court struck down IEEPA tariffs in February 2026, the Trump administration needed replacement tariff authority immediately. Within days, the White House invoked Section 122 of the Trade Act of 1974, which allows the president to impose tariffs up to 15% for 150 days to address fundamental balance-of-payments problems.
The 10% surcharge took effect February 24, 2026. It applies to virtually all imports from all countries, with specific exemptions for USMCA-qualifying goods, civil aircraft, and goods already under Section 232. The statutory expiration date is July 24, 2026.
This was the first time in history any US president had invoked Section 122. And from day one, it was legally questionable.
The Lawsuits
Two cases are now consolidated before a three-judge CIT panel: Chief Judge Mark A. Barnett, Judge Claire R. Kelly, and Senior Judge Timothy C. Stanceu.
Case 1: State of Oregon et al. v. Trump (CIT No. 1:26-cv-01472) Filed March 5, 2026 by Oregon Attorney General Dan Rayfield, joined by 23 other state attorneys general (mostly Democratic-led states).
Case 2: Burlap and Barrel, Inc. v. Trump (CIT No. 1:26-cv-01606-3JP) Filed March 9, 2026 by spice importer Burlap & Barrel and toy maker Basic Fun, represented by the Liberty Justice Center.
Both cases challenge the legality of the Section 122 tariff. The states focus on procedural and statutory arguments. The small business plaintiffs add a constitutional nondelegation doctrine claim.
The Legal Argument
Plaintiffs argue three main points:
1. There's no balance-of-payments crisis. Section 122 requires a "fundamental international payments problem" to invoke. Plaintiffs argue the administration is conflating the goods trade deficit with a balance-of-payments deficit — they're not the same thing under the statute. The US has run goods trade deficits for decades; that's not a "fundamental international payments problem" as Congress defined it.
2. The proclamation isn't "broad and uniform." Section 122 requires that any tariff imposed under it be applied broadly and uniformly. The proclamation exempts 8 nations and provides various carve-outs, which plaintiffs argue violates the statutory uniformity requirement.
3. Nondelegation (small business plaintiffs only). Liberty Justice Center adds a constitutional argument: Congress can't delegate sweeping tariff authority to the president without intelligible principles, and Section 122 as invoked here exceeds those limits.
The Liberty Justice Center filed a combined motion for preliminary injunction and summary judgment on March 13, 2026. The states filed for summary judgment the same day.
What's at Stake
If the CIT rules against the government:
- The 10% Section 122 tariff is invalidated. Future collections stop immediately.
- Existing payments may be refundable. Customs law firms (Cherry Bekaert, Snell & Wilmer) are already advising importers to preserve entry data to support potential refund claims, drawing explicit parallels to the IEEPA refund precedent.
- The administration would lose its replacement tariff authority. Section 122 expires July 24, 2026 anyway, but losing it early creates a gap before any new Section 301 actions can take effect.
If the CIT rules for the government:
- The 10% surcharge continues until July 24, 2026 when it statutorily expires
- The administration is expected to introduce new Section 301 country-specific tariffs to replace it (investigations against 16 countries are already underway)
- Plaintiffs will likely appeal to the Federal Circuit and potentially the Supreme Court
Timeline
The states filed motion for summary judgment March 13. Burlap & Barrel filed combined PI + SJ motion the same day. The April 10 hearing covered both. Oregon AG Rayfield said the court is "hopeful to get a result sooner than later" — expect a ruling within weeks, not months, given the July 24 statutory sunset.
Whichever side loses will almost certainly appeal to the Federal Circuit. If that happens, the case could end up at the Supreme Court for a second tariff showdown within a single year.
What Importers Should Do
1. Track every Section 122 payment. If the tariff gets struck down, you'll need entry-level documentation to claim refunds. Don't wait for a court ruling to start gathering records.
2. Talk to your customs broker about preserving rights. Some legal arguments suggest filing protests within 180 days of liquidation to preserve refund eligibility — similar to the IEEPA case. Your broker can advise.
3. Don't budget for permanent Section 122 relief yet. Even if it's struck down, the administration has Section 301 investigations ready to roll. The 10% on most imports likely gets replaced with country-specific rates that could be higher or lower depending on origin.
4. Watch for a ruling. This could come any day. Importers who know first can plan first.
Source
Liberty Justice Center Case Page | NY AG Complaint Filing | White House Section 122 Proclamation | BNN Bloomberg Hearing Coverage
Stay on top of every tariff change and legal development affecting your imports. Monitor your HTS codes with TariffDesk →