Trade Court Knocks Down Section 122 Tariffs

On May 7, 2026, the U.S. Court of International Trade (CIT) issued a decision holding that Section 122 of the Trade Act of 1974 does not provide the Trump administration authority to impose the broad-based ten percent tariff currently being assessed on all goods imported into the U.S. In State of Oregon et al. v. Trump and related consolidated actions, the CIT held that the Trump Administration exceeded its statutory authority in imposing the ten percent tariff surcharge and ordered collections halted as to some of the plaintiffs in those cases.

Following the Supreme Court’s February 2026 decision invalidating the tariffs imposed under the International Emergency Economic Powers Act (IEEPA), the Trump Administration invoked Section 122 to impose a temporary 10% tariff on nearly all imports entering the United States. Section 122 authorizes the President to impose temporary import restriction when “fundamental international payments problems” exist, including serious deficits or imminent depreciation of the U.S. dollar. The Trump Administration justified the tariffs on the United States’ trade deficit and broader economic concerns.

In a split decision, a CIT three-judge panel ruled that the Trump Administration’s use of Section 122 tariffs was invalid and unauthorized by law. The majority emphasized that Congress enacted Section 122 to address limited balance-of-payments emergencies during a very different and specific international monetary environment. Under the majority’s reading, that environment shaped the meaning of the term “balance of payments deficits” in the law. The majority found that the conditions invoked by the Trump Administration were not balance of payments under the law and therefore, could not support imposing duties under Section 122.

The CIT declined to issue a nationwide injunction, so the decision only applies to the three successful private parties and the State of Washington. Therefore, Section 122 collections will continue as to all other importers. This case, however, was immediately appealed, and the appeals court imposed a temporary stay of the lower court’s decision and scheduled briefing on whether to extend the stay until the end of the appeal.

Dental Trade Alliance members should monitor this case as it winds its way through appeal. At this moment, little likelihood exists that any future Section 122 refund claims you may wish to raise will be lost in the event the appeals court(s) affirm the CIT’s decision.