The Court of International Trade struck down Section 122 global tariffs for failing to meet the statute's balance-of-payments standard; the Federal Circuit immediately stayed the order.
A divided three-judge panel of the U.S. Court of International Trade ruled May 7 that the administration's 10% global tariffs, imposed under Section 122 of the Trade Act of 1974, are unlawful [1]. The panel found that the administration failed to identify the specific type of "balance-of-payments deficits" the statute requires as a predicate for invoking that authority [2]. The ruling is the second consecutive court defeat for the administration's tariff program in a short span, compounding uncertainty for importers operating under the current trade regime [3].
The case, styled as a challenge to the Section 122 replacement tariffs, was heard before the Court of International Trade in Washington [1]. The Department of Justice, representing the administration, filed an appeal the following day [2]. The U.S. Court of Appeals for the Federal Circuit entered an administrative stay on May 12, permitting U.S. Customs and Border Protection to continue collecting the contested tariffs while the appeal proceeds [2]. Relief from the CIT's order is currently limited to the three named plaintiffs and does not extend to the broader importer community [3].
The statutory significance is considerable. Section 122 grants the President authority to impose temporary tariffs to address balance-of-payments deficits, but the CIT held that the administration's invocation of that authority did not satisfy the statute's threshold conditions [1]. The ruling signals that courts are prepared to scrutinize the factual predicates underlying emergency trade powers, not merely the President's characterization of a national economic condition [2]. With Section 122 now a contested vehicle, legal analysts have noted that Section 301 investigations represent the administration's most defensible remaining pathway for imposing broad tariff measures [3].
The Federal Circuit stay preserves the status quo for now, but the underlying appeal will require the court to resolve whether the CIT correctly interpreted Section 122's balance-of-payments language and whether the administration's findings were legally adequate [2]. Importers outside the named-plaintiff class remain subject to the tariffs during the pendency of the appeal and face continued uncertainty about their exposure depending on the appellate outcome [3]. A ruling from the Federal Circuit, once fully briefed and argued, could either restore the administration's Section 122 authority or confirm that the statutory predicate was never properly triggered [1].