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On 7 May 2026 a divided CIT panel (Judges Barnett and Kelly in majority; one dissent) issued Slip Op. 26-47, the third major Article-III judicial check on the Trump-2.0 unilateral-tariff architecture in 2026, following (1) the 20 February 2026 SCOTUS 6-3 ruling in Learning Resources, Inc. v. Trump (IEEPA does not authorise tariffs, vacating EO 14257) and (2) the Section 122 Proclamation 11012 that immediately followed as the administration's statutory replacement instrument.
The statutory interpretation holding. Section 122 of the Trade Act of 1974 (19 U.S.C. § 2132) authorises the President to impose a temporary import surcharge of up to 15% for up to 150 days upon finding "fundamental international payments problems." The majority held that Congress in 1974 used "balance of payments" in its technical sense — the liquidity balance or official-settlements balance that was the operative measure of US external accounts in 1974 — not the broader goods-trade deficit or current-account deficit that the administration invoked. Proclamation 11012 therefore lacked the requisite statutory finding and exceeded the scope of the delegated authority.
Standing. The 23 state-plaintiffs (led by Oregon) were dismissed for lack of Article-III standing; their alleged economic harms were held too speculative. Three plaintiff-importers — Burlap & Barrel, Inc., Basic Fun, Inc., and the State of Washington (in its importer-of-record capacity) — had paid or were imminently facing payment of Section 122 duties and had sufficient concrete injury-in-fact.
Relief limited to prevailing plaintiffs. The court declined to issue a nationwide injunction, choosing instead a named-plaintiff injunction plus duty-refund-with-interest for the three prevailing importers. This limits the immediate fiscal impact but the precedent binds CBP in every case involving these plaintiffs and the merits holding creates persuasive authority for the CAFC and any subsequent facial challenge.
Procedural posture (post-ruling). On 12 May 2026, the CAFC entered an administrative stay suspending the CIT permanent injunction while it considers a longer stay pending appeal — meaning CBP is not currently processing the refunds. On 20 May 2026, the CIT denied the government's motion to stay its own ruling pending appeal, signalling the panel's confidence in the merits holding. The CAFC appeal is now fully docketed; the substantive question is whether Section 122's "balance of payments" language is broad enough to cover a goods-trade-deficit finding.
122 was the administration's sole remaining broad-based tariff authority after SCOTUS invalidated IEEPA for tariff purposes. A CAFC affirmance would leave the administration with only the narrower Section 232 (product-specific national-security tariffs) and Section 301 (retaliatory tariffs against specific-country unfair practices) — neither of which authorises a uniform global surcharge.
150-day clock on Proclamation 11012 runs out 24 July 2026 regardless of the judicial outcome. If the CAFC has not ruled by then, the question of whether to extend (which requires Congressional legislation) becomes politically live.
means the three prevailing importers are not yet receiving duty refunds. If the CAFC ultimately affirms, refunds accrue with statutory interest from the payment date. A nationwide injunction — which the CIT declined to issue — remains unavailable at this stage; other importers would need to file separate suits.
government's position that goods-trade deficits suffice under § 122 is now a contested and judicially resolved (at CIT level) legal question. Any future Section 122 invocation faces the same threshold challenge — effectively making § 122 unusable until the CAFC rules.
second successful judicial challenge to the administration's tariff architecture in 2026 (after SCOTUS IEEPA ruling). Track CAFC briefing schedule and any Supreme Court cert petition.
administrative stay)?
interpretation? Briefing schedule not yet published as of filing.
mooting the appellate question?
sunset — and would such a rate increase require a fresh § 122 finding vulnerable to the same challenge?
merits holding, creating additional refund exposure for the Treasury?