Section 122 Stay: Why Importers Still Pay the 10%

On May 7, 2026, a panel of the U.S. Court of International Trade ruled 2-1 that the President’s 10% Section 122 import surcharge exceeds his legal authority.

Then on May 12, the U.S. Court of Appeals for the Federal Circuit issued an administrative stay of the CIT decision while the administration’s appeal moves forward. The surcharge is still being collected.

Here is what that sequence of events actually means for your business

Section 122 of the Trade Act of 1974 gives the President authority to impose a tariff surcharge of up to 15% on imports for up to 150 days in response to a “large and serious balance-of-payments deficit.” The Trump administration invoked it on February 24, 2026, imposing a 10% across-the-board surcharge after the Supreme Court struck down the IEEPA tariffs on February 20.

The surcharge was set to expire July 24, 2026.

The Court of International Trade found that “balance-of-payments deficit” is a Bretton Woods-era concept — it refers to liquidity deficits in the official international monetary system, not the trade deficits the administration cited in the proclamation. The court held that using Section 122 to address a trade deficit rather than a Bretton Woods-style payments imbalance goes beyond what the statute authorizes.

In plain terms: the court ruled the administration used the wrong legal tool.

The administration appealed the CIT ruling. On May 12, the Federal Circuit issued an administrative stay of the trade court’s decision. The government has seven days to respond on the broader motion to stay through the appeal.

Under the stay, the CIT ruling is suspended. Customs continues to collect the 10% surcharge. Nothing changes at the port level for your shipments today.

The three plaintiffs who won at the CIT level — Burlap & Barrel, Basic Fun!, and the State of Washington — were protected by the original plaintiff-specific injunction. Every other importer is operating under the stay.

The practical answer is straightforward: continue treating the 10% surcharge as a live cost. It is, regardless of what the CIT ruled, because the stay supersedes the ruling while the appeal is pending.

The longer question is what happens after the appeal. If the administration prevails, the surcharge continues until July 24 and the CIT ruling is reversed. If the Federal Circuit upholds the CIT, the stay likely lifts and the refund questions that follow will depend on how your entries were filed and liquidated.

Your customs broker should be tracking your entry status and advising on the exposure picture as the appeal progresses. That conversation should be happening now, not after the ruling.

In parallel with the Section 122 litigation, the Trump administration opened a new Section 301 investigation in May 2026 covering structural trade imbalances with sixteen countries — including Vietnam, Thailand, Cambodia, Malaysia, and others. Section 301 is a different statutory authority, with different procedural requirements and potentially more durable tariff rates. That investigation could produce new tariff mechanisms effective as early as late July, coinciding with Section 122’s original expiration date.

The legal environment around import tariffs has moved fast. Three major mechanisms have been challenged or invalidated in the span of three months. The most useful posture is staying current with each development — not reacting to headlines after the fact.

The customs teams at Premio and Falcone Global are tracking this daily. Reach out if you need to work through what the current landscape means for your supply chain.

Sources: U.S. Court of International Trade, May 7, 2026; ST&R Tariff Analysis — Federal Circuit administrative stay, May 12, 2026; Nixon Peabody LLP — tariff refund process.

Headquartered in Atlanta, GA, Falcone Capital Holdings, LLC is a global leader in international and domestic transportation and logistics. Falcone Capital Holdings operates across six continents through wholly owned subsidiaries and partner offices, and is synonymous with cutting-edge services across all modes of international and domestic transportation. The Falcone Companies are licensed, bonded and insured through all federal and state agencies including Customs and Border Protection, Federal Maritime Commission (FMC), Federal Motor Carrier Safety Administration (FMCSA), Transportation Security Administration (TSA) and Department of Homeland Security (DHS), and is a Tier 2 validated member of the Customs Trade Partnership against Terrorism (C-TPAT).