Client Advisory: U.S. Court of International Trade Invalidates Section 122 Tariffs for Named Plaintiffs

On May 7, the U.S. Court of International Trade (CIT) issued a 2-1 decision finding that the Administration's tariffs imposed under Section 122 of the Trade Act of 1974 are unlawful. The Court found that the statutory prerequisite-a qualifying "balance of payments deficit"-was not properly established.

Importantly, the Court declined to issue a universal injunction. As a result, Section 122 tariffs remain in effect for all importers except the named plaintiffs. The government is expected to appeal promptly, with the case likely proceeding to the U.S. Court of Appeals for the Federal Circuit, and potentially the Supreme Court.

Statutory Finding Rejected

• The majority held that the Administration failed to identify a qualifying "balance of payments deficit" as required by Section 122.
• The Court rejected reliance on broader economic indicators-such as trade deficits, the current account deficit, and the net international investment position-as insufficient under the statute.

Relief Limited to Named Plaintiffs

• The Court expressly declined to issue a universal injunction.
• The permanent injunction applies only to the named plaintiffs, including importer parties and the State of Washington in its capacity as an importer.

Refunds Ordered for Plaintiffs

• The judgment directs the government to:
  • Cease imposing Section 122 tariffs on the named plaintiffs within five days, and
  • Refund all Section 122 duties paid by those plaintiffs, with interest.

Given the limited scope of the ruling and the expected appeal, no immediate, broad-based action is required. However, importers should consider the following:

Evaluate litigation or injunction pathways.

• Importers may wish to assess whether participation in existing or future litigation could provide access to similar relief (i.e., inclusion within an injunctive scope).
• These considerations are highly fact-specific and will vary by importer.

Prepare for continued tariff exposure.

• The Administration is actively transitioning tariff actions toward Section 301 authority, which follows a more structured process (investigation, hearings, and public comment) and is generally less vulnerable to procedural challenges.
• As a result, tariffs are unlikely to be eliminated in the near term, even if Section 122 authority is ultimately curtailed.

Monitor appellate developments closely.

• Any broader relief will depend on outcomes at the Federal Circuit, and potentially the Supreme Court, as well as the issuance of any stays pending appeal.
• Timing and scope of relief remain uncertain until appellate proceedings are resolved.

SEKO will continue to monitor developments closely and will provide updates as the appeal progresses or if broader relief mechanisms become available.

For questions regarding the applicability of this ruling or its potential impact on your imports, please contact your SEKO representative or email [email protected].