John H. Chun, Partner

Overview. On May 7, 2026, the U.S. Court of International Trade ("CIT") held that President Trump's tariffs imposed under Section 122 of the Trade Act of 1974 ("Section 122") were unlawful. In Burlap and Barrel, Inc. v. Trump, the CIT entered summary judgment for the importer plaintiffs and the State of Washington, concluding that Proclamation No. 11012, issued on February 20, 2026 (the "Proclamation"), unlawfully imposed a 10% tariff on imports beyond the authority granted to the President under Section 122. These plaintiffs were granted an injunction against future duty collection and refunds on duties previously paid.

The Trump Administration promptly appealed the ruling, which was stayed on May 12 by the U.S. Court of Appeals for the Federal Circuit. Accordingly, although the CIT's decision is significant on the merits, any change to existing Section 122 tariffs must await further judicial or administrative action.

The CIT Ruling. The CIT's analysis focused on the statutory requirement that Section 122 may be used only when qualifying "balance-of-payments deficits" exist. The Proclamation pointed to indicators including trade and account deficits, income deficits and a net external liability position, which the CIT found did not meet the statute’s threshold. Therefore, the CIT did not entirely reject the premise that Section 122 authorizes tariffs under certain circumstances; rather, it held that the Trump Administration's stated justification for invoking the statute did not satisfy the statutory conditions Congress imposed.  

Limited Relief. Although the importer plaintiffs and the State of Washington prevailed on the merits, the CIT limited relief to parties that established standing. The court found that the State of Washington, Burlap and Barrel, Inc., and Basic Fun, Inc. had demonstrated imminent injury caused by the tariffs and were therefore entitled to relief. By contrast, the remaining state plaintiffs did not make the required showing and were denied similar relief as a result.

Immediate Practical Effect for Importers; Trump Administration Appeal. Given the limited scope of the CIT's ruling, the immediate takeaway from the decision was that covered imports remained subject to Section 122 tariffs, subject to further judicial or administrative action.

Just one day after the decision, the Trump Administration appealed to the U.S. Court of Appeals for the Federal Circuit. On May 12, the appeals court issued an administrative stay of the CIT's order. This order does not address the underlying merits of the CIT's decision regarding Section 122 or its scope; that must await further appellate review. For now, however, the CIT's order is not operative as to the named importer plaintiffs and the State of Washington, and Section 122 duties will continue to be assessed on covered imports.  

Next Steps. Although Section 122 tariffs remain applicable to covered imports, importers should continue to monitor developments in this litigation. They should also continue to maintain detailed entry and payment records and monitor all relevant deadlines, including deadlines for filing protests to liquidated entries, to preserve the ability to seek refunds in the future.

For prior Herrick alerts on the Trump Administration's tariffs, see IEEPA Tariff Refunds: CBP Launches Its Refund Portal and Refund Claims for Invalidated IEEPA Tariffs.