May 7, 2026: The Court of International Trade ruled 2-1 that Proclamation 11012 — the 10% Section 122 import surcharge — is unlawful. Most importers must keep paying for now, but action you take this week determines whether you get a refund later.
Preserve My Refund RightsThe 2-1 decision, Slip Op. 26-47, in detail.
On May 7, 2026, a three-judge panel of the U.S. Court of International Trade issued a 2-1 ruling invalidating Proclamation 11012, signed February 20, 2026 and effective February 24, 2026. The proclamation imposed a 10% surcharge on virtually all U.S. imports under Section 122 of the Trade Act of 1974.
The court held that the administration's stated justification — citing the current account balance and goods trade deficit — did not constitute a "balance-of-payments deficit" as Congress understood that term when it enacted Section 122. The ruling found the action ultra vires and entered a permanent injunction against further collection from the named plaintiffs.
Judge Timothy Stanceu dissented, arguing the statute does not freeze economic measurement in time and that the President reasonably relied on Department of Commerce data showing a severe current account deficit.
The injunction is limited. It binds CBP only as to the named plaintiffs — the State of Oregon, the State of Washington, and the importer plaintiffs Burlap and Barrel and Basic Fun. Every other US importer must continue paying the 10% surcharge while the government appeals to the Federal Circuit.
If the Federal Circuit affirms the CIT ruling, the importers who filed timely protests will be first in line for refunds. Importers who did nothing may still recover but will face longer processing and potentially weaker legal positions. The protest window is 180 days from each liquidation.
The legal context after the Supreme Court's IEEPA ruling.
Section 122 of the Trade Act of 1974 (19 U.S.C. § 2132) authorizes the President to impose temporary import surcharges of up to 15% for up to 150 days when needed to address "large and serious United States balance-of-payments deficits." It is intended for narrow, emergency-style use and has been rarely invoked since enactment.
The CIT's central holding: the modern statistical measures the administration relied on (current account balance, goods trade deficit) are not the "balance-of-payments deficit" Congress had in mind in 1974, and so the proclamation is outside the statutory authority.
What non-plaintiff importers should do this week.
In ACE, run the ES-003 (Entry Summary Details) report and filter for entries with Section 122 charges from February 24, 2026 forward. Section 122 duties are reported under their own classification codes — your customs broker can help isolate them. Note both the entry date and the liquidation date for each.
For each liquidated entry, file a protest under 19 U.S.C. § 1514 within 180 days of liquidation. Identify the Section 122 duties as contested and cite the CIT's May 7, 2026 ruling in State of Oregon, et al. v. United States, et al. Even if CBP denies the protest (which is expected while the appeal is pending), filing preserves your rights.
Some trade attorneys recommend filing a parallel suit under 28 U.S.C. § 1581(i) — the same vehicle used for many IEEPA refund claims. This is more aggressive and may be appropriate for high-volume importers or those with substantial Section 122 exposure. Discuss with a licensed customs attorney.
Keep meticulous records of every Section 122 charge: entry numbers, dates, amounts, country of origin, HTS codes. If a CAPE-style administrative refund pathway opens after final appellate review, you will need this data ready to upload — exactly as IEEPA importers did in April 2026.
Despite the CIT ruling, CBP will continue collecting the 10% Section 122 surcharge from non-plaintiff importers. Refusing to pay creates separate legal exposure and does not advance your refund claim. Pay, document, and protest.
Three scenarios shape the refund timeline.
If the U.S. Court of Appeals for the Federal Circuit upholds the CIT's reasoning, the ruling extends nationwide. CBP will likely be ordered to refund Section 122 duties to all importers, possibly through CAPE Phase 2 or a new automated pathway. Importers with timely protests are processed first.
If the appellate court finds that current-era trade deficit measures qualify as "balance-of-payments deficits" under Section 122, the proclamation stands. No refunds for non-plaintiffs (plaintiffs may still benefit from their permanent injunction). Importers continue paying through July 24, 2026 expiration.
Either side may petition for certiorari. SCOTUS already decided IEEPA on similar separation-of-powers grounds (Learning Resources v. Trump, Feb 20, 2026), so it could take this case quickly. A SCOTUS affirmance would lock in nationwide refunds; a reversal would end the litigation.
We'll email you the moment the Federal Circuit rules and any time CBP opens a Section 122 refund pathway.
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