International Trade Court Strikes Down Tariffs Imposed Under Trade Act

On May 7, 2026, the U.S. Court of International Trade (“Court”) enjoined tariffs imposed by the Trump administration pursuant to Section 122 of the Trade Act of 1974.¹ The Court granted injunctive relief to the plaintiffs, including the State of Washington (on behalf of the University of Washington) and private importers that imported goods subject to the tariff.

Tariffs Under Section 122

Under Section 122 of the Trade Act of 1974, the President is authorized to impose a temporary import surcharge for up to 150 days and not to exceed 15% “whenever fundamental international payments problems require special import measures to restrict imports to deal with large and serious United States balance-of-payments deficits…”

On February 20, 2026, President Trump announced a 10% tariff on most imports pursuant to Presidential Proclamation No. 11012 under Section 122. This new tariff was announced immediately after the U.S. Supreme Court invalidated tariffs imposed by the administration under the International Emergency Economic Powers Act (IEEPA).² The tariff under Section 122 went into effect on February 24.

Challenges

In March 2026, a total of 24 states, including California, New York, and Oregon, as well as two private businesses, filed suit in the Court seeking to enjoin the tariffs.

Decision

The Court granted summary judgment in favor of private importers (Burlap and Barrel, and Basic Fun) and the State of Washington (on behalf of the University of Washington, an importer subject to the tariffs) and permanently enjoined the tariffs as applied to them. Equitable factors supported injunctive relief because the tariffs caused ongoing economic harm and were unlawful.

It held that the president exceeded statutory authority because the proclamation relied on trade and current account deficits, rather than the specific concept of “balance-of-payments deficits” as understood when Congress enacted Section 122. Balance-of-payments deficits refer to liquidity, official settlement, or basic balances. As a result, the tariffs were deemed ultra vires (unauthorized by law).

However, the Court dismissed claims by most state plaintiffs for lack of standing, finding their alleged economic harms (e.g., indirect cost increases) too speculative. Only plaintiffs directly subject to the tariffs (importers) had standing. Thus, the Court declined to issue a nationwide injunction, limiting relief to the successful plaintiffs.

Ryan’s Take and Action Steps

This decision marks the second strike against tariffs imposed by the administration and will likely open the floodgates to claims for relief from importers. It seems that while the Court granted complete relief to the importers in this case, it did not issue an order granting universal relief to all importers that paid the Section 122 tariffs. Thus, importers must continue to pay, and Customs and Border Protection must continue to collect the Section 122 tariffs. Importers need to track when the tariff payments become liquidated, which starts the 180-day clock for filing protests for refunds. It is expected that the administration will appeal.

Thus far, the reaction from the Trump administration is that this is just another setback, but there are other avenues to impose tariffs. Those other avenues may include imposition of additional tariffs under Section 301 of the Trade Act of 1974, which allows tariffs in response to unreasonable, unjustifiable, or discriminatory foreign trade practices, as well as tariffs under Section 232 of the Trade Expansion Act of 1962, which are based on national security concerns.

As a leading advocate for taxpayers, Ryan has made it a priority to assist taxpayers with refunds of tariffs that have been found to be unlawful. If your business has paid tariffs imposed under Section 122 or IEEPA, please contact a Ryan representative for guidance on next steps.

¹ State of Oregon, et al. v. United States and Burlap and Barrel Inc., et al. v. United States, US Ct. Int’l Trade, Slip Op 26-47 (May 7, 2026).

² Learning Resources Inc., et al. v. Trump, President of the United States, U.S. Sup. Ct., No. 24-1287 (February 20, 2026).

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