The legal challenge to the administration’s 10% Section 122 tariff moved fast in May 2026. On May 7, the Court of International Trade (CIT) ruled the tariff exceeded the president’s statutory authority. Five days later, on May 12, the Court of Appeals for the Federal Circuit issued a temporary stay—meaning, for now, CBP keeps collecting the duty while the appeal plays out.

For importers, this is the second tariff regime in a year to land in court. The 10% Section 122 tariff took effect February 24, 2026 as the replacement for the IEEPA tariffs the Supreme Court had just struck down. Now the replacement itself is contested.

Here’s what the ruling says and what it changes.

Inside the CIT decision

Two things stand out: the decision was narrow, and the reasoning was specific.

It was narrow. The court granted relief to only three plaintiffs who showed standing as direct importers:

• The State of Washington (through University of Washington imports)
• Burlap and Barrel, Inc., a New York spice importer
• Basic Fun, Inc., a Florida toy company

Twenty-three other state plaintiffs were dismissed for lack of standing. In other words, the ruling did not automatically benefit every importer paying the tariff—only the parties who were actually in the case.

The reasoning was specific. Section 122 of the Trade Act of 1974 lets the president act on a “balance-of-payments deficit,” measured by particular metrics: the liquidity balance, the official settlements balance, and the basic balance. The court found the administration’s proclamation leaned instead on trade deficits and current-account shortfalls—measures it deemed too broad to satisfy the statute. The principle echoes the Supreme Court’s IEEPA decision: if the president invokes a tariff statute, the statute’s own conditions have to be met on their own terms.

What the stay means right now

With the Federal Circuit’s temporary stay in effect, nothing changes operationally for importers today: the 10% Section 122 tariff is still being collected from everyone. The court gave the plaintiffs seven days to respond to the appeal, and a final outcome could be months away.

The refund outlook

If the CIT ruling ultimately survives, refunds would most likely flow through CBP’s existing machinery—plausibly the same CAPE system already handling IEEPA refunds. But the path is far from certain, and a few barriers could narrow it:

• The government may resist refunding entries that liquidated beyond the 90-day reliquidation window.
• Refunds could be limited to importers who actually filed legal challenges, mirroring the CIT’s emphasis on parties to the litigation.
• The appeal could stretch on, delaying any resolution by months.

The takeaway: don’t bank on a Section 122 refund yet, but don’t assume you’re automatically covered if one comes.

What importers should do now

Five practical moves while the appeal is pending:

1. Quantify your exposure. Add up the Section 122 duties you’ve paid since the February implementation.
2. Weigh filing suit. The CIT was explicit that only direct importers party to the litigation received relief—so being on the sidelines may mean being outside any eventual refund.
3. Watch the appeal. Track the plaintiffs’ seven-day response and the Federal Circuit’s decision on whether to extend the stay.
4. Monitor entry liquidation. Which of your entries remain unliquidated affects whether—and how easily—you could recover later.
5. Get advisory help if it’s layered. Many importers are now juggling IEEPA refunds, a possible Section 122 refund, and incoming Section 232 and 301 duties at the same time.

The bigger picture

The Section 122 tariff is set to expire July 24, 2026 regardless of how the appeal resolves. That deadline caps the downside, but it doesn’t settle the refund question for duties already paid. The pattern from the past year is clear: tariff authority keeps getting tested in court, and the importers who stay organized—tracking exposure, liquidation status, and deadlines—are the ones positioned to recover when a ruling finally sticks.