More Tariff Refunds, Not So Fast? Court of International Trade Strikes Down Section 122 Tariffs — But Relief Is Limited to Plaintiffs

By Brett W. Johnson, Derek Flint, and T. Troy Galan

On May 7, 2026, the U.S. Court of International Trade (CIT) issued a decision in the consolidated cases Oregon v. Trump and Burlap & Barrel, Inc. v. Trump, holding that the Administration’s 10% global tariff imposed under Section 122 of the Trade Act of 1974 is unlawful. Although the decision invalidates Proclamation 11012, the CIT’s relief is narrow. CIT entered a permanent injunction only as to the two private importer plaintiffs (Burlap & Barrel and Basic Fun!) and the State of Washington, while declining to enjoin collection on a nationwide basis.

As most importers are largely not covered by the injunction, Customs and Border Protection (CBP) is expected to continue assessing and collecting Section 122 tariffs while the case proceeds on appeal. As such, importers of record should not assume that the ruling will automatically result in across-the-board relief. The Consolidated Administration and Processing of Entries (CAPE) refund mechanism recently established by CBP currently applies only to International Emergency Economic Powers Act (IEEPA) tariffs and does not provide a vehicle for Section 122 refunds. Importers of record with material Section 122 exposure should evaluate whether affirmative steps are warranted to preserve refund rights to include filing a lawsuit at the CIT. Companies, regardless of importer of record status, should review contractual provisions governing tariff pass-throughs and refund entitlement to avoid legal disputes.

I. What the CIT Decided

Section 122 authorizes the President to impose a temporary import tariff of up to 15% for no more than 150 days when “fundamental international payments problems require special import measures,” including “large and serious” U.S. balance-of-payments deficits. The President invoked Section 122 to impose a 10% tariff on virtually all imports, effective February 24, 2026, through July 24, 2026.

But the CIT held that Proclamation 11012 exceeded the authority under Section 122. The CIT rejected the Administration’s argument that the United States’ goods trade deficit and current-account deficit satisfied the statutory predicate, reasoning that “balance-of-payments deficits” and “fundamental international payments problems” are distinct from a long-running trade imbalance.

II. The Scope of Relief Is Narrow

The key practical feature of the injunction is what it does not do. The CIT entered a permanent injunction only for the plaintiffs before it and expressly declined to issue a universal or nationwide injunction. As the court explained, “[c]osts to one plaintiff is not an appropriate basis for the imposition of a universal injunction.” Of note, this decision to not apply the refund to all importers of record may implicate the on-going IEEPA litigation cases and those importers of record that are solely relying on the CBP’s CAPE process for refunds.

For other importers subject to Section 122 tariffs, the status quo continues. CBP has not issued instructions halting collection of Section 122 tariffs for non-plaintiffs, and the tariffs continue to be assessed on entries outside the scope of the injunction. Further, the CAPE refund process currently applies only to IEEPA tariffs and does not provide a mechanism for Section 122 refunds.

The Administration is expected to appeal to the U.S. Court of Appeals for the Federal Circuit and may seek a stay pending appeal. The Federal Circuit may address both the merits of the CIT’s Section 122 ruling and the scope of available relief (e.g., whether it should apply to all importers of record), with potential further review by the U.S. Supreme Court.

III. What Importers Should Consider Now

Because the CIT’s relief is only to the named plaintiffs, the appropriate next steps depend on whether an importer of record has already taken action to preserve Section 122 refund rights.

Importers of Record that have paid Section 122 tariffs – Importers that have paid Section 122 tariffs, but have not initiated litigation or taken other steps to preserve refund rights should evaluate whether to file suit at the CIT, submit protests to CBP, or pursue other claim-preservation strategies. Because CAPE is currently limited to IEEPA tariffs, importers should not rely on an existing administrative refund channel for Section 122 tariffs.

Importers with pending IEEPA challenges – Importers with pending IEEPA tariff litigation should evaluate whether their existing filings preserve Section 122 claims or whether they should be amended or expanded. An IEEPA-only filing may not provide a procedural basis to recover Section 122 tariffs if the CIT’s ruling is ultimately affirmed.

Companies subject to Section 122 tariffs – Companies, regardless of whether they are the importer of record, should review contracts, purchase orders, and customer terms to address the allocation of tariff costs and any future refunds. Disputes over the separate IEEPA tariff refunds are already emerging among importers, downstream customers, and end-users, and similar disputes are likely if Section 122 refunds become available.

Companies should consider making clear whether tariff costs may be passed through, whether refunds must be credited back to customers, and who is entitled to any recovery if CBP later issues refunds. This is important both for importers of record and for downstream companies that bear tariff costs through pricing.

IV. Bottom Line

The CIT’s decision is significant, but its direct legal effect is limited. It holds that the Section 122 tariff is unlawful as promulgated, but it does not stop CBP from collecting Section 122 tariffs from non-party importers.

The legal landscape remains unsettled. An appeal is expected, the Section 122 tariffs expire by their own terms in July, and pending Section 301 and Section 232 investigations may generate replacement tariffs under more durable statutory authorities.

Importers materially exposed to Section 122 tariffs should not wait for a uniform refund process to materialize. They should evaluate litigation, protest, and contractual-preservation strategies now, before further legal and procedural developments narrow the available options.