On May 7, 2026, the Court of International Trade issued an opinion holding that the Section 122 of the Trade Act of 1974 (19 U.S.C. section 2132) does not provide a basis for the tariffs imposed by President Donald Trump on February 20, 2026, under Proclamation No. 11012.
State of Oregon v. United States, CIT Case Nos. 26-01442-3 and 01606-3, May 7, 2026. The decision is limited to the individual plaintiffs and the State of Washington.
Section 122 of the 1974 Trade Act was passed to create short term emergency powers for the President to act if the US balance of payments was out of line and the economy needed short-term intervention. In 1971, following President Richard Nixon’s termination of the ability to convert US currency into physical gold, inflation was rampant, the money supply with expanding without limitations, and wages became stagnant. Among other things, it created a rapid devaluation of the US dollar as well as an immediate increase in US debt. To stabilize the US economy, acting under purported authority of the Trading with Enemy Act of 1917 (“TWEA”), President Nixon imposed modest tariffs. The predecessor to the Court of International Trade, the United States Customs Court disallowed the tariffs as exceeding the grant of power to the executive under TWEA. Yoshida Int’l, Inc. v. United States, 73 Cust. Ct. 1, 378 F.Supp. 378 (Cust. Ct. 1974) (“Yoshida I”). In response to the economic events of 1971-1974, in connection with a general overhaul of US Trade Statutes, Congress repealed TWEA and replaced it with the 1974 Trade Act, including section 122.
Following the decision of the US Supreme Court in Learning Resources v. Trump, 146 S.Ct. 628 (2026) invalidating President Trump’s “reciprocal” tariffs, the President imposed new tariffs under Section 122. See Proclamation No. 11012 dated February 20, 2026. Proclamation No. 11012 bases its finding of a “balance of payments” imbalance on the alleged trade deficit. The CIT disagreed based on the legislative history of Section 122. The Administration has announced its intention to appeal the decision to the United States Court of Appeals for the Federal Circuit.
The challenge to the Section 122 tariffs was not brought as a class action, so the CIT decision only applies to the State of Washington and the named plaintiffs. Expect a class action to be filed soon to expand the application of the injunction to all importers.
Meanwhile, with the illegality of the Section 122 tariffs now established, owners and contractors should be including requirements to refund the Section 122 tariffs in contracts. Regarding the tariffs under section 232 of the Trade Expansion Act of 1962, expect these challenges on a product by product basis, likely brought as class actions.
One final observation, as with the IEEPA tariffs, which were invalidated in the Supreme Court’s decision in Learning Resources, supra, the legal challenges to the Section 122 tariffs are apolitical. Among the leading voices challenging the tariffs on legal grounds are libertarians and Constitutional libertarians, including the Liberty Justice Center as well as “Blue” state attorneys general from Oregon, New York and California.
