Current status: Section 122 tariffs are still being collected. The Federal Circuit issued an administrative stay on May 12, pausing the lower court's invalidation ruling while the appeal proceeds. Nothing changes at the border today.
On May 7, 2026, the United States Court of International Trade issued a ruling that challenged the legal foundation of the 10% global import surcharge that has been in place since February. The court found that Proclamation 11012 — the executive order activating Section 122 of the Trade Act of 1974 — was unlawfully issued. The administration appealed the following day. A federal appeals court quickly moved to preserve the status quo.
For importers, the practical reality hasn't changed. Tariffs are still being collected, brokers are still filing under normal procedures, and landed costs haven't shifted. But the ruling opens a legal pathway that didn't exist a month ago, and how you manage your records over the next several months will determine whether you can access it.
The core legal question was narrow but consequential: does the current US trade deficit qualify as a "large and serious balance-of-payments deficit" under Section 122?
The statute was enacted in 1974, in the immediate aftermath of the Nixon administration's suspension of dollar convertibility and the collapse of the Bretton Woods system. The phrase "balance-of-payments deficit" carried a specific meaning in that context — a shortfall in the overall financial account, reflecting dollars flowing out of the country to settle international obligations, not simply a gap between what the US imports and exports in goods.
The Legal Gap
Section 122 authorizes emergency tariffs when the President determines there is a "large and serious United States balance-of-payments deficit." The CIT found that a general merchandise trade deficit — the figure the administration cited — is a different measure than what the 1974 Congress had in mind when writing the statute.
The court's conclusion: the Proclamation exceeded the scope of the authority it invoked.
Trade law practitioners at Holland & Knight and Ward and Smith had flagged this interpretation risk in analyses published shortly after the Proclamation took effect in February. Gibson Dunn, which previously noted that the administration had threatened but never formally imposed the statutory maximum rate of 15%, similarly identified the balance-of-payments justification as a potential point of legal vulnerability. None of these observations constituted predictions — but they accurately mapped the terrain the CIT ultimately traveled.
February 24, 2026
Proclamation 11012 takes effect. The 10% global surcharge begins applying to most imports, invoking Section 122 authority on balance-of-payments grounds.
May 7, 2026
The Court of International Trade rules Proclamation 11012 invalid. The court finds the balance-of-payments deficit cited does not meet the statutory definition required by the Trade Act of 1974.
May 8, 2026
The Department of Justice files an appeal with the Court of Appeals for the Federal Circuit (CAFC).
May 12, 2026
The CAFC issues an administrative stay. The CIT ruling is paused while the appeal is considered. Tariff collection resumes and continues normally.
July 24, 2026
Section 122 expires regardless of how the appeal resolves. The 150-day statutory limit runs on its own clock.
An administrative stay is procedural, not substantive. The CAFC has not ruled on whether the CIT was right or wrong — it has simply frozen the lower court's ruling to prevent operational chaos while the appeal is briefed and argued. On any given day, US Customs processes millions of entry lines. Abruptly stopping tariff collection on all of them while an appeal is pending would create significant disruption; a stay avoids that.
The CAFC will now set a briefing schedule: the government files its opening brief, the plaintiff files a response, and the government may file a reply. Oral argument, if granted, typically follows. Federal circuit appeals on trade matters have historically taken six to eighteen months from filing to decision.
That timeline matters: a final CAFC ruling is unlikely before Section 122 expires on July 24. Which means the most significant near-term outcome of this litigation is not whether tariffs continue or stop — it is whether past collections were lawful.
Some confusion has surfaced in importer communities about whether the litigation might extend Section 122 beyond its statutory limit. It will not.
The 150-day clock written into Section 122 runs independently of the courts. Whether the CAFC affirms the CIT, reverses it, or returns the case for further proceedings, Section 122 tariffs expire on July 24, 2026. The President cannot extend them unilaterally. Congress has not acted to extend them.
A government victory in the appeal would validate the original Proclamation — but it would not revive a statute that has already run its course. July 24 is a hard stop either way.
If the CAFC ultimately affirms the CIT, importers who paid Section 122 duties from February 24 through July 24 may be entitled to refunds. The mechanism would resemble the IEEPA refund process that followed the February Supreme Court ruling — a structured claim process through US Customs and Border Protection, most likely using the CAPE system or a protest procedure.
That scenario is not certain, and it is not imminent. But it is now legally possible in a way it wasn't before May 7. The practical question is whether you will have the documentation to support a claim when — and if — that process opens.
The standard window to file a protest with CBP is 180 days from liquidation of the entry. Liquidation typically occurs within 314 days of entry, but can happen earlier. Importers who let that protest window close without action generally cannot reopen it. If you've been importing throughout this period, talk to your customs broker now about your entry liquidation schedule.
Model your import costs with and without Section 122. The ruling changes the legal backdrop — the landed cost math is still the math.
Run the Calculator →Sources: Court of International Trade docket filings (May 2026); legal commentary from Holland & Knight, Gibson Dunn, and Ward and Smith trade practice groups. Section 122 statutory text: 19 U.S.C. § 2132. All tariff rates reflect current CBP assessments as of the date of this article. This analysis is for informational purposes only and does not constitute legal or trade advice.