Section 122 Struck Down — Why Most Importers Still Pay

On May 7, 2026, a divided three-judge panel of the U.S. Court of International Trade ruled that the Section 122 global tariff exceeds presidential authority. The headlines that followed implied the surcharge was over. It is not. The CIT issued a permanent injunction against further collection — but only against the three plaintiffs in the case: Burlap & Barrel, Basic Fun!, and the State of Washington. Every other U.S. importer is still paying the 15% surcharge as of today, and CBP is still collecting it.

This is the post for the importers who are not on that plaintiff list — which is essentially all of you. Here is what the ruling actually held, what the DOJ appeal looks like, and the four realistic paths forward depending on the size of your Section 122 exposure.

Companion reading: Our post-SCOTUS analysis covers the February 20 ruling that struck down IEEPA. The Section 122 explainer covers the statute itself. The July 24 expiration planning guide covers what happens when the statutory clock runs out.

What the CIT Actually Held on May 7

The case, Burlap & Barrel et al. v. Trump, challenged the proclamation that imposed the Section 122 temporary import surcharge on February 24, 2026 (initially 10%, raised to 15% on April 6). Section 122 of the Trade Act of 1974 allows the President to impose a temporary import surcharge of up to 15 percent for up to 150 days when the country faces "fundamental international payments problems."

The 2–1 majority found two structural defects in the proclamation:

1. The cited deficits are not "balance-of-payments" deficits as Congress understood the term in 1974. The proclamation cited current account balances and goods trade deficits as the qualifying emergency. The CIT held that "balance of payments" in 1974 meant the comprehensive measure that includes the capital account — not just current-account or goods-only metrics. The U.S. capital account has been in surplus, so the statutory predicate was not met.
2. The action exceeds the statute's textual constraints. Because the proclamation did not identify a balance-of-payments deficit consistent with the 1974 meaning, the court ruled the action ultra vires — beyond statutory authority.

The dissent argued the President should receive substantial deference on what constitutes a "fundamental international payments problem" and that the majority was substituting its own economic judgment.

Critical detail in the relief: The injunction is permanent but limited to the plaintiffs. The court declined to enter a nationwide injunction, citing recent Supreme Court guidance on the proper scope of equitable relief and the availability of refunds as an adequate remedy at law.

Who Is Actually Protected by the Ruling

Exactly three parties:

Party	Type	What they get
Burlap & Barrel	Spice importer (NY)	Permanent injunction; Section 122 stops being collected on their entries
Basic Fun!	Toy importer (FL)	Permanent injunction; Section 122 stops being collected on their entries
State of Washington	State government plaintiff	Permanent injunction protecting state-government imports

That's it. Every other importer in the United States is still paying the 15% surcharge on every non-USMCA entry. CBP issued no CSMS notice changing collection procedures after the ruling. The Section 122 Chapter 99 lines are still being added to every affected entry summary.

The DOJ Appeal Timeline

On May 8, 2026 — one day after the ruling — the Department of Justice filed a notice of appeal with the U.S. Court of Appeals for the Federal Circuit. On May 11, the administration filed a separate motion asking the CIT to stay its own injunction pending appeal.

Three things will happen, in order:

1. CIT decides the stay motion (expected within 2–4 weeks). If granted, the CIT essentially pauses its own ruling for the plaintiffs while the appeal proceeds. If denied, DOJ will seek a stay directly from the Federal Circuit.
2. Federal Circuit briefing schedule (3–4 months). Expedited briefing is likely given the magnitude of the underlying duties at stake.
3. Federal Circuit ruling (estimated late Q3 or Q4 2026). The Federal Circuit will address both (a) the merits of the Section 122 question and (b) the proper scope of relief — which is the question that matters most for non-plaintiff importers.

Two outcomes from the Federal Circuit would change the picture for everyone:

• Affirmed on the merits + nationwide injunction expanded. All Section 122 collection stops, with refund exposure on every dollar collected since February 24, 2026.
• Affirmed on the merits + relief remains plaintiff-limited. Collection continues for non-plaintiffs, but the legal theory is locked in. A wave of follow-on suits and putative class actions becomes inevitable.

The statutory expiration on July 24, 2026 may resolve the surcharge before the Federal Circuit rules. The legal-precedent question survives the expiration; the cash-collection question may not.

What This Means for Non-Plaintiff Importers

Section 122 is still being collected at 15% on every non-USMCA entry. You have four realistic options, and the right one depends on your annual Section 122 exposure.

Path 1 — Preserve Protest Rights on Section 122 Entries (Recommended for All Sizes)

Section 122 duties, like IEEPA duties before them, can be protested under 19 U.S.C. § 1514 within 180 days of liquidation. Filing protests now does not require litigating; it preserves your eligibility to claim a refund later if the Federal Circuit affirms the CIT ruling with broader relief.

What to do:

1. Identify entries with Section 122 Chapter 99 codes (9903.02.01 for the 15% surcharge)
2. Calculate the Section 122 duty paid per entry
3. File CBP Form 19 protests citing Burlap & Barrel v. Trump as the legal basis
4. Track liquidation dates — protests must be filed within 180 days of liquidation

This is the lowest-effort, highest-optionality move. Filing a protest costs essentially nothing but preserves your refund eligibility if the legal landscape shifts.

Path 2 — Join a Follow-On Putative Class Action

Multiple trade-litigation firms are organizing putative class actions on the same theory CIT accepted. These will likely be filed in the coming weeks. If certified, a class action lets non-plaintiff importers ride the legal theory without bearing their own litigation costs.

Best fit for: Importers with $50,000–$1,000,000 in Section 122 exposure who can wait 12–24 months for resolution and are willing to share recovery with class counsel (typically 25–33% contingency).

Path 3 — File Your Own Lawsuit at the CIT

For high-exposure importers — generally those with over $1 million in Section 122 duties paid — filing a parallel action at the CIT may be the fastest path to relief. The legal theory is now established by Burlap & Barrel. A new plaintiff in a new case can move for the same permanent injunction.

This is expensive (typically $150,000–$400,000 in legal fees through CIT) but the recovery clock starts immediately, not after Federal Circuit resolution.

Path 4 — Wait for the July 24 Sunset

Section 122 has a statutory 150-day cap, which expires July 24, 2026. If the administration does not invoke a different authority to replace it, the surcharge ends automatically.

This is the right call only for importers whose Section 122 exposure is small enough that the cost of any active path exceeds the recovery. The risk: the administration may invoke a different authority (Section 232 expansion, a Congress-authorized surcharge, or a renewed Section 122 proclamation citing different deficit measures) to keep the surcharge in place.

Decision Framework

Annual Section 122 paid	Recommended path	Why
Under $10,000	Path 4 (wait) + Path 1 (protests on largest entries)	Cost of active litigation exceeds recovery
$10,000–$100,000	Path 1 (protect everything) + Path 2 (join class)	Protests preserve eligibility; class action handles litigation cost
$100,000–$1,000,000	Path 1 + Path 2; consider Path 3	At this size, protest-then-class is usually optimal
Over $1,000,000	Path 1 + Path 3 (file your own)	Independent litigation pays for itself

What Could Change This Picture

Three near-term developments could meaningfully shift the calculus:

• Federal Circuit grants a stay. Pauses the plaintiff-level injunction but does not change the broader analysis. Watch for the stay decision in the next 2–4 weeks.
• Trump invokes a replacement authority before July 24. Most likely candidates: a new Section 122 proclamation citing capital-account data, expanded Section 232 product coverage, or a Congress-passed import surcharge. Any of these would extend the underlying duty exposure past the statutory sunset.
• CAPE Phase 2 includes Section 122 entries. Currently CAPE Phase 1 only handles IEEPA refunds. If Phase 2 (scheduled for Q3–Q4 2026, per CBP's planning) extends to Section 122 entries — possible if the Federal Circuit affirms with broader relief — the refund mechanics for non-plaintiffs become much easier.

What to Do This Week

For most SMB importers (under $100K annual Section 122 exposure), three concrete actions:

1. Pull a list of all Section 122 entries since February 24, 2026. Look for Chapter 99 codes 9903.02.01 (15% surcharge) or 9903.02.00 (initial 10% rate). Use our duty calculator to confirm Section 122 amounts per entry.
2. Identify the entries closest to their 180-day liquidation deadline. Those are your protest priorities — once 180 days run, the refund window closes regardless of how the Federal Circuit rules.
3. File a CBP Form 19 protest on each priority entry, citing Burlap & Barrel v. Trump and reserving rights pending appellate resolution.

This locks in your optionality at minimal cost. Active litigation or class participation can come later, once the Federal Circuit signals direction.

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This post summarizes the May 7, 2026 CIT ruling, the May 8 DOJ notice of appeal, and the May 11 stay motion as of May 12, 2026. The legal landscape is changing weekly; verify any specific deadline or filing strategy with a licensed customs attorney before acting.