The US Court of Appeals for the Federal Circuit (CAFC) has temporarily reinstated the collection of tariffs imposed under Section 122 of the Trade Act of 1974, adding further uncertainty for importers challenging the Trump administration’s use of the statute. While the appellate court has not ruled on the legality of the tariffs themselves, its decision allows US Customs and Border Protection (CBP) to continue collecting the duties pending appeal, leaving the prospect of future refunds unresolved.
Background
The dispute stems from the Trump administration’s decision to impose a 10% tariff under Section 122 of the Trade Act of 1974, which authorizes temporary trade measures to address certain international balance-of-payments concerns.
In May 2026, the US Court of International Trade (CIT) ruled that the administration had exceeded its statutory authority. The court concluded that the government relied on measures such as the trade deficit, current account deficit, and net international investment position—metrics that the CIT found were not the types of “balance-of-payments deficits” Congress intended Section 122 to address.
As a result, the CIT permanently enjoined CBP from collecting the tariffs from the plaintiff importers, prompting the government to immediately appeal.
Federal Circuit Grants Stay Pending Appeal
After the CIT declined to suspend its own injunction, the government sought relief from the Federal Circuit.
On June 11, 2026, the appellate court granted a stay pending appeal, allowing CBP to continue collecting Section 122 duties while the litigation proceeds.
In reaching its decision, the Federal Circuit applied the traditional four-factor test governing requests for a stay.
Likelihood Of Success
The appellate court concluded that the government had demonstrated a sufficient likelihood of success to justify preserving the status quo.
In particular, the court questioned whether the CIT interpreted the phrase “balance-of-payments deficits” too narrowly. According to the Federal Circuit, the legislative history cited by the government raises substantial questions about whether Congress intended to limit the statute exclusively to the specific accounting methods relied upon by the CIT.
The court also rejected arguments that a broader interpretation of Section 122 would violate constitutional non-delegation principles, concluding that the statute contains sufficient limitations on executive authority.
Irreparable Harm
The Federal Circuit also found that allowing the injunction to remain in effect could significantly disrupt government operations and trade policy.
Among other concerns, the court noted that:
- Additional refund actions would likely follow if the injunction remained in place.
- The injunction could interfere with ongoing trade negotiations.
- Importers might accelerate shipments to avoid potential duties.
- CBP would incur administrative burdens associated with modifying its systems to process refunds.
Harm To Importers
Although acknowledging that importers would continue paying duties during the appeal, the court concluded that any financial injury could largely be remedied through refunds with interest if the tariffs are ultimately declared unlawful.
The court also determined that broader business impacts—such as operational disruption, reputational concerns, lost profits, or reduced growth opportunities—are not unique to the stay itself but arise from the tariff regime generally.
Public Interest
The Federal Circuit characterized the public interest factor as neutral, observing that its ultimate weight depends upon whether the tariffs are eventually upheld or invalidated on the merits.
What Importers Should Watch
Several important issues remain unresolved as the appeal continues.
Continued Collection Of Duties
Because the stay suspends the CIT’s injunction, CBP will continue collecting Section 122 duties while the appeal is pending, at least through the current statutory expiration date of July 24, 2026, unless Congress acts or the administration extends the program under available statutory authority.
Refunds Remain Uncertain
The Federal Circuit emphasized that its decision does not resolve the merits of the appeal. Nevertheless, its conclusion that the government has demonstrated a likelihood of success creates additional uncertainty regarding whether importers will ultimately be entitled to refunds.
If the Court of International Trade’s original decision is ultimately reinstated after appeal, affected importers may wish to evaluate filing actions seeking recovery of duties paid.
Maintain Documentation
Importers should continue preserving entry documentation, monitoring applicable protest deadlines, and closely following developments in the ongoing litigation in order to protect potential refund rights.
Potential Future Tariffs
The litigation may also have implications beyond the current dispute. Recent public comments by US Trade Representative Jamieson Greer suggest that Section 122’s temporary 150-day limitation may not necessarily prevent future reauthorizations under successive time periods, raising the possibility that similar tariffs could be imposed again.
Looking Ahead
The government’s opening appellate brief is expected during July 2026, making a final decision before the current Section 122 duties expire unlikely. Depending on the Federal Circuit’s eventual ruling, the case could also be reviewed by the US Supreme Court.
Until then, importers face continued uncertainty. While the underlying legality of the Section 122 tariffs remains unresolved, businesses should continue complying with current duty requirements while preserving documentation and monitoring the litigation for any future refund opportunities.