2026-05-08
A federal trade court has ruled that President Donald Trump’s 10% global tariff imposed under Section 122 of the Trade Act of 1974 was unlawful, a decision that could eventually open the door to refunds for importers if the ruling is upheld on appeal.
The U.S. Court of International Trade said on May 7 that the administration used the statute for reasons Congress did not authorize. Section 122 allows a temporary tariff of no more than 150 days if the president determines it is needed to address “large and serious United States balance-of-payments deficits.” The court found that Trump’s reliance on the U.S. trade deficit and related monetary concerns did not meet that legal standard.
The case, Oregon et al. v. U.S. et al., came after Trump announced the tariff on Feb. 20, the same day the Supreme Court said a separate part of his tariff agenda was unlawful under the International Emergency Economic Powers Act. The new ruling adds another legal setback for the administration’s trade policy and raises fresh questions for importers already paying duties on wine, spirits and other goods.
The court limited its order to the parties in the lawsuit, which means the government can continue collecting the tariff from importers who were not part of that case. It also does not require immediate refunds for everyone who has paid the duty. Still, trade lawyers say the decision could matter far beyond the named plaintiffs if it survives further review.
The Trump administration has already filed a notice of appeal with the U.S. Court of Appeals for the Federal Circuit. That court is expected to take months to rule, and any side could then seek review by the Supreme Court. If higher courts uphold the trade court’s decision, importers may be able to seek refunds for duties paid during the 150-day period when the tariff was in force.
That possibility is significant because importers have already paid millions of dollars in Section 122 duties since late February. The tariff is scheduled to expire on July 24, but many shipments entered during that window will not be liquidated by Customs and Border Protection for months. Under normal procedures, importers generally have 180 days after liquidation to file protests.
The ruling may also affect broader tariff litigation now moving through the courts. The federal government is already operating a refund process for some tariffs found unlawful under IEEPA, and officials must soon decide whether to appeal an order governing those repayments. A second loss in court over Section 122 could strengthen arguments from both sides as they fight over how refunds should be handled and who should receive them.
For now, importers are being advised to keep records of entries subject to Section 122 duties, including CBP Form 7501 summaries, and to monitor liquidation dates closely. Some companies may choose to file their own lawsuits before future shipments arrive in order to avoid paying the tariff at all. Others may wait for appellate courts to decide whether the trade court’s ruling stands.
The administration has also taken steps toward using another law, Section 301 of the Trade Act of 1974, once Section 122 expires, suggesting that tariff policy is likely to remain unsettled in the months ahead.