Overview. On May 7, 2026, the U.S. Court of International Trade ("CIT") held that President Trump's tariffs imposed under Section 122 of the Trade Act of 1974 ("Section 122") were unlawful. In Burlap and Barrel, Inc. v. Trump, the CIT entered summary judgment for the importer plaintiffs and the State of Washington, concluding that Proclamation No. 11012, issued on February 20, 2026 (the "Proclamation"), unlawfully imposed a 10% tariff on imports beyond the authority granted to the President under Section 122. These plaintiffs were granted an injunction against future duty collection and refunds on duties previously paid.
The Trump Administration promptly appealed the ruling, which was stayed on May 12 by the U.S. Court of Appeals for the Federal Circuit. Accordingly, although the CIT's decision is significant on the merits, any change to existing Section 122 tariffs must await further judicial or administrative action.
The CIT Ruling. The CIT's analysis focused on the statutory requirement that Section 122 may be used only when qualifying "balance-of-payments deficits" exist. The Proclamation pointed to indicators including trade and account deficits, income deficits and a net external liability position, which the CIT found did not meet the statute’s threshold. Therefore, the CIT did not entirely reject the premise that Section 122 authorizes tariffs under certain circumstances; rather, it held that the Trump Administration's stated justification for invoking the statute did not satisfy the statutory conditions Congress imposed.
