Court Sharply Questions Section 122 Tariff Legality: CIT April 10 Hearing May Eliminate 10% Import Surcharge
A three-judge panel of the U.S. Court of International Trade heard oral arguments on April 10, 2026 in two lawsuits challenging the legality of the 10% Section 122 import surcharge. Judges aggressively questioned the government's legal basis — the phrase 'balance of payments' came up 194 times — and the DOJ changed its legal position mid-hearing after its core data was challenged. If the CIT strikes down the tariffs, as the Supreme Court did with IEEPA tariffs in February, FBA sellers importing from all countries would see immediate relief on import costs. A ruling is expected before the July 24, 2026 statutory expiration.
Real-World Impact
A seller importing a product at $10 landed cost currently pays ~$1.25 in Section 122 duties (10% on post-301-duty value). A successful CIT ruling would eliminate that $1.25/unit — saving $1,250/month on 1,000 units. Sellers sourcing from China face stacked duties above 50% today.
Key Points
- CIT three-judge panel heard oral arguments April 10, 2026 in two cases: Oregon et al. v. Trump (24 states) and Burlap and Barrel v. Trump (Liberty Justice Center for small businesses)
- Judges sharply questioned the administration — the phrase 'balance of payments' appeared 194 times; a judge directly asked whether any large trade deficit is sufficient to trigger Section 122
- DOJ changed its legal position mid-hearing: its 'monetary reserves' argument failed, so it pivoted to arguing the 'current account deficit' justifies the tariff
- DOJ's current account data was challenged — the deficit actually shrank by $69 billion between 2024 and 2025, contradicting the government's 'growing larger' claim
- If the CIT rules against the tariffs, the 10% Section 122 surcharge would be eliminated immediately — mirroring the IEEPA tariff strike-down on February 20, 2026
- July 24, 2026 is the statutory expiration date regardless of court outcome; any ruling is expected to be appealed by the losing party
What You Should Do Now
- 1Do not cut prices or renegotiate supplier contracts based on potential tariff relief — wait for a formal CIT ruling before making margin adjustments
- 2Register with CBP's ACE portal now and maintain detailed import entry records — a favorable ruling may create refund rights similar to the IEEPA CAPE process
- 3Monitor trade law news sources (Liberty Justice Center, Covington, DuaneMorris) for the CIT decision, which could come within weeks
- 4Model two cost scenarios: one with the 10% surcharge running through July 24, and one without it if the court rules it invalid
- 5If tariffs are struck down, act quickly to file for duty refunds — the IEEPA CAPE refund portal (opens April 20) provides a model for how CBP will likely handle Section 122 refunds