The Court of International Trade invalidated the administration's 10% Section 122 fallback tariff, leaving its universal import surcharge strategy without a confirmed legal foundation.
The U.S. Court of International Trade struck down the administration's 10% universal import surcharge on May 7, ruling that the proclamation imposing the levy under Section 122 of the Trade Act of 1974 failed to satisfy the statute's threshold requirements [1]. A two-judge majority held that the administration did not identify the specific type of balance-of-payments deficit that Section 122 requires as a predicate for action, rendering the measure legally invalid [1]. A third judge dissented [1].
The case, State of Oregon v. United States, was brought before the Court of International Trade, a federal tribunal seated in New York with exclusive jurisdiction over customs and international trade disputes [1]. The Section 122 surcharge was not the administration's original instrument of choice. The administration imposed it the same day the Supreme Court invalidated the prior universal tariffs imposed under the International Emergency Economic Powers Act, making Section 122 the designated fallback authority [1]. That sequence placed the replacement tariff under immediate legal scrutiny, and Oregon's challenge moved quickly to a merits ruling [1].
The substantive significance of the decision extends well beyond this single surcharge. Section 122 carries a statutory ceiling of 150 days on any surcharge imposed under its authority, a constraint that already limits its usefulness as a long-term trade tool [1]. With both IEEPA and now Section 122 authority invalidated at the trial-court level, the administration faces a narrowing set of legal instruments to maintain a universal import surcharge regime [1]. The ruling also opens the door to refund litigation by importers who paid duties under a surcharge that a federal court has now found unlawful [1].
The Federal Circuit appeal is pending, and the Court of International Trade's order does not take immediate effect [1]. The surcharge remains temporarily in place while the appellate court considers the government's challenge [1]. Businesses subject to the 10% levy must continue paying it for now but should preserve their protest rights with U.S. Customs and Border Protection to position themselves for potential refund claims should the Federal Circuit affirm [1]. The appellate court's ruling will likely determine whether the administration retains any viable legal vehicle for a broad, undifferentiated import surcharge outside of specific statutory trade-remedy frameworks.