Legal Fight Over Section 122

The legal fight over Section 122 is now the next front in the tariff wars, with judges weighing whether President Donald Trump could lawfully revive broad import taxes under a rarely used 1974 trade law. (scotusblog.com) (usnews.com) The immediate backdrop was *Trump v. V.O.S. Selections*: the Supreme Court ruled 6-3 on February 20, 2026, that the International Emergency Economic Powers Act did not authorize the president’s earlier tariffs. The Court had granted review on September 9, 2025, heard argument on November 5, 2025, and affirmed the challenge brought by small businesses and states. (scotusblog.com) (supremecourt.gov) That case began in the U.S. Court of International Trade, where a three-judge panel ruled for V.O.S. Selections and other importers on May 28, 2025. The plaintiffs included V.O.S. Selections, Plastic Services and Products, MicroKits, FishUSA, and Terry Precision Cycling, represented in part by the Liberty Justice Center. (cit.uscourts.gov) After the Supreme Court knocked out the earlier tariff program, the administration turned to Section 122 of the Trade Act of 1974. Trump imposed a 10% tariff on most imports effective February 24, 2026, and the new cases argue that Section 122 was written for narrow, temporary responses to international payments problems, not an open-ended global tariff. (libertyjusticecenter.org) (usnews.com) (internationaltradeinsights.com) Two tracks of challengers moved quickly. Twenty-four states sued in the Court of International Trade on March 5, 2026, and Liberty Justice Center filed *Burlap & Barrel, Inc. v. Trump* for two private companies on March 9, 2026, seeking to block the duties and win refunds of tariffs already paid. (internationaltradeinsights.com) (libertyjusticecenter.org) At oral argument on April 10, 2026, judges on the Court of International Trade pressed government lawyers on whether a large trade deficit or general economic imbalance was enough to trigger Section 122. Reuters reported that the panel questioned whether the statute’s reference to “international payments” could support a broad 10% tax on most imports. (usnews.com) (apnews.com) The challengers’ legal theory is broader than statutory wording alone. The complaints say there is no current balance-of-payments crisis of the kind Congress had in mind in 1974, and they also argue that reading Section 122 this broadly would hand the president tariff power without a meaningful limit. (internationaltradeinsights.com) (libertyjusticecenter.org) The administration’s position is that Section 122 does delegate tariff authority in this setting, and government lawyers defended the February 2026 proclamation in court. The states and business plaintiffs answered that the Supreme Court’s February ruling in *V.O.S. Selections* foreclosed another attempt to build a sweeping tariff regime without clearer congressional approval. (usnews.com) (scotusblog.com) Refunds are central to the stakes. Liberty Justice Center said after the Supreme Court’s February 20 ruling that about $166 billion in tariff payments, plus interest, would be returned to importers from the earlier unlawful tariff program, and trade lawyers have told clients to preserve refund rights through the Court of International Trade and customs procedures. (libertyjusticecenter.org) (crowell.com) That is why Section 122 litigation is drawing so much attention from importers. If the new tariffs also fall, the same court system that handled *V.O.S. Selections* could become the main route for another round of duty refunds — and for the next test of how far a president can go on trade without Congress. (cit.uscourts.gov) (libertyjusticecenter.org) (internationaltradeinsights.com)