CIT hears Section 122 case
- The U.S. Court of International Trade held an intensive hearing on Section 122 tariffs and 1974 legislative history. - Judges Kelly, Stanceu, and Barnett extensively questioned both sides, with the government technically favored but the outcome close. - The court's focus on 'balance‑of‑payments deficits' and legislative intent could decide whether those tariffs survive or require refunds (x.com).
A federal trade court spent more than three hours on April 10 testing whether President Donald Trump’s 10% global tariff can legally rest on a 1974 law built for “balance-of-payments deficits.” (cit.uscourts.gov, reuters.com) The hearing combined two cases at the U.S. Court of International Trade: *The State of Oregon v. Trump* and *Burlap and Barrel, Inc. v. Trump*. The three-judge panel was Chief Judge Mark Barnett, Judge Claire Kelly, and Judge Timothy Stanceu. (cit.uscourts.gov, courtlistener.com, courtlistener.com) The tariff at issue began with Proclamation 11012 on February 20, 2026. It imposed an additional 10% ad valorem duty on imports from every country for 150 days, with collection starting February 24. (federalregister.gov, content.govdelivery.com) Section 122 is a narrow emergency valve in the Trade Act of 1974. It lets a president temporarily use tariffs or quotas when the United States faces “large and serious” balance-of-payments deficits or related international payments problems. (federalregister.gov, cov.com) That old phrase is the whole fight. The states and small businesses say a trade deficit is not the same thing as a balance-of-payments deficit, while the administration says the statute gives the president room to act when international payments problems threaten the economy. (abcnews.com, whitehouse.gov) The timing traces back to a different loss for the White House. On February 20, 2026, the Supreme Court held 6-3 in *Learning Resources, Inc. v. Trump* that the International Emergency Economic Powers Act does not authorize tariffs, and the administration turned to Section 122 the same day. (cov.com, sullcrom.com) Oregon and 23 other states sued on March 5, 2026, asking the court to block the new tariff. A second suit followed on March 9 from Burlap & Barrel and other small-business plaintiffs represented by the Liberty Justice Center. (doj.state.or.us, libertyjusticecenter.org) At the hearing, judges pressed both sides on what Congress meant in 1974 and whether courts can review the president’s finding that the United States has a qualifying deficit. Reuters reported the panel suggested that a large trade deficit alone may not be enough for a worldwide tariff. (reuters.com, axios.com) The administration’s proclamation says the surcharge should stay in place until July 24, 2026, the outer edge of Section 122’s 150-day limit. Customs guidance says the duty applies unless a listed exemption covers the entry. (federalregister.gov, content.govdelivery.com) The stakes go beyond whether the tariff survives for a few more months. If the court rules Section 122 was misused, importers will push for the same kind of refund process now being worked out for the earlier tariffs struck down under the emergency-powers law. (sullcrom.com, hklaw.com) For now, the judges have the tariff, the 1974 text, and the legislative record in front of them. Their eventual answer will turn on whether Section 122 still reaches a modern U.S. trade gap — or only the older kind of international payments crisis Congress had in mind. (agri-pulse.com, cit.uscourts.gov)
