The U.S. Court of International Trade (CIT) has ruled that Proclamation No. 11012 — the 10% Section 122 import surcharge implemented on February 24, 2026 — is invalid, creating immediate implications for importers currently paying the additional duties.
In a 2-1 decision issued on May 7, 2026, the court found that the Administration failed to establish the type of “balance-of-payments deficit” required under Section 122 of the Trade Act of 1974 to justify the temporary surcharge. As a result, the court declared the proclamation contrary to law.
The ruling is one of the most significant recent developments affecting U.S. trade policy and tariff enforcement.
What the Court Ruled
The court’s judgment declared Proclamation No. 11012 invalid and ordered a permanent injunction for the named importer plaintiffs in the case. The court also ordered that Section 122 duties already paid by those plaintiffs be refunded with interest.
The decision stems from challenges filed by several states and private importers, including Burlap and Barrel, Inc. and Basic Fun, Inc., against the United States and U.S. Customs and Border Protection.
Duty Collection Continues for Most Importers
Importers should understand that the ruling does not currently stop Section 122 duty collection for the broader trade community.
The permanent injunction presently applies only to the named plaintiffs identified in the litigation. The Government is expected to appeal the ruling and may seek a stay while litigation continues.
Until additional guidance is issued, importers should assume Section 122 duties remain active and enforceable for entries outside the scope of the injunction.
Refund Opportunities May Exist
Although refunds are not automatic, the ruling creates potential recovery opportunities for importers that paid Section 122 duties.
Companies should begin reviewing affected entries now and evaluate protest timelines to preserve refund rights where applicable.
Importers with significant exposure may benefit from:
- Reviewing entries subject to the 10% surcharge
- Identifying liquidation status
- Evaluating protest eligibility
- Monitoring future CBP guidance related to refund procedures
CAPE Could Become a Future Refund Mechanism
Earlier this year, CBP used the Consolidated Administration and Processing of Entries (CAPE) system to process refunds tied to IEEPA duties following separate court action.
While CBP has not announced a CAPE process for Section 122 duties, many trade professionals expect the agency could adopt a similar administrative pathway if refunds are expanded beyond the named plaintiffs.
Alba is actively monitoring whether CBP issues additional operational guidance tied to protests, refunds, or CAPE processing.
The Tariff Was Already Set to Expire
The Section 122 surcharge is currently scheduled to expire on July 24, 2026, unless extended by Congress or replaced through additional executive action.
However, the ruling introduces substantial uncertainty surrounding:
- Ongoing enforcement
- Future collections
- Refund eligibility
- Administrative processing requirements
- Potential replacement trade actions
Why This Matters for Importers
For many importers, the 10% surcharge materially increased landed costs and created new sourcing and compliance challenges over the past several months.
This ruling may create opportunities to recover duties paid, but the situation remains fluid as appeals and possible administrative actions develop.
Importers should take proactive steps now to assess exposure and preserve available options.
How Alba Can Help
Alba Wheels Up International Contact Us
Alba’s customs brokerage and trade advisory teams are actively monitoring developments related to the Section 122 ruling and expected appeal activity.
We can assist with:
- Entry reviews
- Protest strategy
- Refund eligibility analysis
- CAPE preparation
- Ongoing trade compliance guidance
Reference Materials
This advisory is based on the May 7, 2026 ruling issued by the U.S. Court of International Trade regarding Proclamation No. 11012 and Section 122 import surcharge authority. Supporting court documents include the official Judgment and Opinion & Order issued in The State of Oregon, et al. v. United States and Burlap and Barrel, Inc., et al. v. United States.
