On May 7, the U.S. Court of International Trade (CIT) ruled in a 2-1 decision that the Section 122 tariffs implemented earlier this year were unlawful. The case was brought by 24 states and a group of importers challenging the administration’s use of Section 122 of the Trade Act of 1974 to impose a global 10% tariff on most imports.
The court ordered the administration to stop collecting Section 122 tariffs from the named plaintiffs, including the State of Washington and two importing businesses, and directed that duties previously paid by those plaintiffs be refunded with interest. The ruling did not establish a nationwide injunction, meaning the tariffs remain in effect for parties outside of the case at this time.
Section 122 allows the president to impose temporary tariffs for up to 150 days in response to “large and serious” balance-of-payments deficits. In its ruling, the CIT determined that the administration’s proclamation relied primarily on broader economic indicators — including the U.S. trade deficit and current account deficit — rather than identifying a balance-of-payments deficit as contemplated under the statute.
The administration is expected to appeal the ruling and seek a stay pending further judicial review.
As the legal process continues, importers and supply chain stakeholders should remain aware that tariff programs and enforcement mechanisms may continue to shift as litigation and additional trade actions progress. Importers may wisht to consider filing protective protests to safeguard possible refunds. Mohawk Global will continue to monitor developments closely and keep you informed with updates and guidance as more information becomes available.