In a landscape defined by volatile trade policy and shifting legal precedents, a recent decision by the U.S. Court of International Trade (CIT) has sent ripples through the importing community. The court’s May 7 ruling, which determined that President Donald Trump’s imposition of a temporary 10% global tariff was illegal, has ignited a fierce debate among legal experts regarding the best course of action for businesses currently paying these duties. While some attorneys urge immediate litigation to preserve rights to potential refunds, others advise a more measured, cautious approach.
The Core Conflict: Section 122 and the Limits of Executive Power
The heart of the dispute lies in the administration’s reliance on Section 122 of the Trade Act of 1974. This provision was utilized to impose a 10% surcharge on imports, a move the government defended as a necessary response to fundamental international payments imbalances. However, the CIT ruled that the administration’s application of this statute exceeded the authority granted to the executive branch, marking a significant victory for the plaintiffs involved in the suit.
Crucially, the ruling currently applies only to the three plaintiffs who brought the case. This narrow scope is a source of frustration and anxiety for thousands of other importers who are subject to the same levies but lack the explicit legal protection granted by a court order.
Chronology of the Legal Challenge
The timeline of these tariffs has been rapid and contentious, reflecting the high-stakes environment of modern trade law:
- February 2026: The administration implements a temporary 10% global import surcharge, citing Section 122 of the Trade Act of 1974. The tariffs are slated for a 150-day window.
- May 7, 2026: The U.S. Court of International Trade issues a landmark ruling declaring the Section 122 tariffs illegal, finding that the administration overstepped its statutory bounds.
- May 8, 2026: The federal government formally files an appeal, signaling its intent to defend the legality of the tariffs at the appellate level.
- Mid-May 2026: The court grants the government’s request to continue the collection of tariffs while the appellate process unfolds, effectively pausing the relief for all but the original plaintiffs.
- July 24, 2026: The statutory expiration date for the temporary Section 122 tariffs. Industry analysts expect the administration to transition to Section 301 tariffs—which target unfair trade practices—to maintain pressure on trading partners.
The Case for Proactive Litigation
For many trade lawyers, the CIT’s ruling—though currently under appeal—is a "shot across the bow" that warrants immediate action from affected businesses. Alexander Schaefer, a partner at the law firm Crowell & Moring, argues that the court has effectively broadcasted its position to those willing to seek judicial intervention.
"The court is essentially saying that the relief is limited to the named plaintiffs," Schaefer noted. "If you want help, you have to come and get it. That means filing complaints and asking for an injunction, getting the same relief that the plaintiffs in this case got."
Schaefer’s perspective is rooted in the "protect your rights" philosophy. Because the court has already signaled that the government’s interpretation of Section 122 is flawed, there is a tangible path to securing a refund, provided an importer is a party to a lawsuit that is eventually validated by higher courts. Without an injunction, companies continue to pay duties into the U.S. Treasury, and recouping those funds later could prove administratively and legally difficult.
A Different Posture: The Growing Track Record Against Executive Tariffs
The legal landscape has shifted in favor of importers compared to previous trade disputes. Brittney Powell, a partner in the International Trade Practice Group at Fox Rothschild, points to the Supreme Court’s February 2026 invalidation of tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA).
"We’re in a different posture here now," Powell explained. "We’ve seen a track record of the administration using these tools to obtain tariffs, and the courts are increasingly finding them unlawful. Consequently, the likelihood of success on the merits is very high."
This history of judicial pushback against aggressive trade measures suggests that the judiciary is becoming increasingly skeptical of broad executive interpretations of trade statutes. For importers, this creates a compelling narrative: the current Section 122 tariffs are not an isolated legal anomaly but part of a pattern of executive overreach that the courts are consistently striking down.
The Argument for Caution: Statutes of Limitations and Appellate Risks
Not all legal experts agree that a "sprint to the courthouse" is the most prudent strategy. Devin Sikes, a partner at Akin Gump Strauss Hauer & Feld, highlights the practical realities of the litigation timeline.
"There is a two-year statute of limitations on filing a lawsuit," Sikes noted. "There is no rush to file right now, especially since the ruling could be overturned on appeal."
Sikes emphasizes that the current CIT ruling is not a final word. The appellate process could drag on for months, if not years, and there is no guarantee that the appellate court—or even the Supreme Court—will uphold the CIT’s findings. For smaller businesses, the legal fees associated with filing a lawsuit against the federal government can be substantial. If the government wins on appeal, these companies would have spent significant resources on a losing effort.
Furthermore, Sikes points out that if the judiciary ultimately agrees with the CIT’s conclusion, a broader mechanism for refunds—similar to the process used for IEEPA-related tariff reversals—could be established. "The bottom line is that if the Court of Appeals or the Supreme Court agrees with the CIT, we would likely see some sort of refund process," he added. "But we are quite a ways from that ultimate conclusion."
Implications for Supply Chain Strategy
Beyond the courtroom, the economic implications for importers are stark. The 150-day window for the Section 122 tariffs, while temporary, represents a massive influx of capital into the U.S. Treasury. For industries with thin profit margins, this "temporary" surcharge can be the difference between growth and contraction.
Financial Preservation
Importers are currently forced to balance the risk of paying the duty against the cost of litigating it. The question facing CFOs and supply chain directors is simple but profound: "What do we do to preserve our rights?" As Schaefer noted, the primary goal for many companies is ensuring that if the legal challenges ultimately succeed, they have a "seat at the table" to reclaim the duties paid since mid-February.
The Looming Transition to Section 301
Adding to the complexity is the expected pivot to Section 301 tariffs after July 24. Unlike Section 122, which is tied to balance-of-payments arguments, Section 301 is firmly rooted in addressing unfair trade practices, such as intellectual property theft or discriminatory digital services taxes. This shift in legal justification may make future tariffs harder to challenge, as Section 301 has historically enjoyed more deference from the courts.
Conclusion: A Strategic Crossroads
The decision to file a lawsuit against the U.S. government regarding these tariffs is not a one-size-fits-all proposition. It is a calculated risk assessment that depends on an importer’s total duty liability, legal budget, and appetite for prolonged litigation.
While the CIT ruling provides a significant legal foothold, the reality of the appellate process means that the final outcome remains uncertain. Importers are encouraged to conduct a thorough analysis of their specific import data and consult with trade counsel to determine if the potential for a refund justifies the immediate costs and risks of litigation.
As the industry approaches the July 24 expiration date, the pressure will only intensify. For many, the path forward is clear: document every payment, maintain detailed records of the goods subject to the surcharge, and keep a watchful eye on the appellate docket. The legal battle over executive trade authority is far from over, and for those who choose to participate, the stakes have never been higher.
