U.S. Can Keep Collecting 10% Tariffs for Now; Appeals Court Allows
Published May 8, 2026 | Updated June 12, 2026
Key Points
- CIT struck down 10% Section 122 tariffs on May 7 in a 2-1 decision.
- Importers paid an estimated $25 billion in just 72 days since February 24.
- Injunction is narrow and applies only to named plaintiffs, not all importers.
- Named plaintiffs get refunds with interest within 5 days.
- Court found the proclamation failed to identify a true balance-of-payments deficit.
- Government was expected to appeal quickly and seek a stay.
- Appeal went to the Federal Circuit, with possible Supreme Court review
- Latest: Federal Circuit granted a stay on June 11, allowing tariffs to continue during appeal
- The 10% global tariff is scheduled to expire in July, unless Congress extends it.
On May 7, the U.S. Court of International Trade (CIT) ruled in a 2-1 decision that the 10% Section 122 tariffs imposed under Presidential Proclamation No. 11012 are unlawful. Importers have paid an estimated $25 billion in these duties since February 24, just 72 days of collection.
Update (June 11, 2026): The U.S. Court of Appeals for the Federal Circuit has granted the federal government’s request to stay the CIT injunction pending appeal. As a result, the government may continue collecting the 10% Section 122 tariffs while the appeal proceeds.
Court Reasoning on the Stay
In granting the stay, the Federal Circuit found that the government showed a sufficient likelihood of success on appeal and that the CIT’s interpretation of Section 122 may be incorrect. The court also found that the government would face irreparable harm without a stay, including trade disruption concerns and difficulties in administering tariff refunds if the injunction remained in place.
The Court said:
“And as to plaintiffs’ argument that the federal government’s alleged harms are purely speculative, we find that the federal government has, at least for the purposes of this preliminary stay ruling, plausibly demonstrated irreparable harm associated with difficulties in recouping Section 122 duties if the injunction is left in place.”
The court also rejected claims that the stay would substantially injure the plaintiffs, stating:
“We are persuaded that, if the tariffs are ultimately found unlawful, refunds with interest reduce any harm from the initial payments themselves or any potential refund delays. As to the harms identified that cannot be resolved through refunds with interest, we agree with the federal government that those alleged harms do not necessarily stem from the stay but rather are a consequence of accounting for the undisputed risk that plaintiffs may ultimately owe the tariffs.”
Accordingly, the Federal Circuit granted the government’s motion for a stay pending appeal, allowing the 10% Section 122 tariffs to remain in effect while the case proceeds before the merits panel. The court emphasized that the ruling does not resolve the underlying legality of the tariffs, which will be addressed on appeal.
What It Means for Importers
Section 122 tariffs remain in effect after the Federal Circuit granted a stay of the CIT injunction pending appeal. This means Customs will continue collecting the 10% tariff while the appeal proceeds.
The earlier CIT injunction applied only to named plaintiffs and did not extend to all importers. That limitation remains relevant, but the stay effectively preserves tariff collection across all entries during the appeal period.
For importers, this keeps current compliance obligations unchanged at the border. Entries must continue to include Section 122 duties unless and until further court action changes enforcement.
That said, importers should:
- Continue paying Section 122 tariffs on current entries
- Maintain protest filings to preserve refund eligibility if the litigation ultimately succeeds
- Track administrative developments that may affect CAPE procedures or post-entry adjustments during the appeal phase
Background/Previous Updates
On May 7, 2026, CIT issued an injunction ordering the government to stop collecting Section 122 tariffs from the named plaintiffs within five days and to refund all Section 122 duties already paid with interest.
For non-plaintiff importers, there is no automatic refund mechanism at this stage. Any potential refunds depend on the final outcome of the appeal and whether relief is extended beyond the named plaintiffs. If the CIT ruling is ultimately upheld and implemented more broadly, refunds would likely be processed through standard post-entry administrative procedures, which can involve significant delays between a final finding of unlawfulness and the actual issuance of refunds.
Preserving potential refund rights through timely protests, accurate entry documentation, and any applicable CAPE or post-entry procedures remains important while the appeal is pending, as any future refunds depend on the final court outcome and administrative process.
The Legal Reasoning
The case came down to whether the President exceeded his authority under Section 122 of the Trade Act of 1974. Section 122 authorizes tariffs to address a “balance-of-payments” deficit. The proclamation, however, pointed to four different things: a large trade deficit, a current account deficit, a negative net international investment position, and a deficit on the balance on primary and secondary income.
The majority held that none of these equates to a balance-of-payments deficit within the meaning of the 1974 statute. In the court’s words: “Nowhere does Proclamation No. 11012 identify balance-of-payments deficits within the meaning of Section 122 as it was enacted in 1974.”
Judge Timothy Stanceu dissented, arguing that BEA statistics on these related measures could reasonably support a balance-of-payments finding, and that the majority erred procedurally by granting summary judgment without giving the government an opportunity to contest the plaintiffs’ factual assertions.
How GHY Can Help?
GHY specializes in helping businesses navigate and reduce the impacts of tariffs through strategic solutions tailored to their needs. Our experts can audit your supply chain to identify inefficiencies, uncover cost-saving opportunities, and ensure compliance with evolving trade regulations. We also employ tariff engineering techniques to optimize product classification and sourcing strategies, minimizing duty exposure and maximizing profitability.
By partnering with GHY, your business gains access to the tools and expertise needed to streamline operations and stay competitive in a challenging trade environment.
Contact Us Today! Booking a Meeting, email consult@ghy.com, or call +1 (800) 667-0771.
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