24 States Sue to Block Trump's Section 122 Tariffs — What It Means for Importers

What Just Happened

After the Supreme Court struck down IEEPA tariffs on February 20, the administration pivoted within hours to Section 122 of the Trade Act of 1974 — imposing a 10% tariff on virtually all imports (recently increased to 15%, with the EU potentially exempt). That authority was designed for a very different era and a very different purpose.

Today, 24 states said that pivot was illegal too. The lawsuit, filed directly in the Court of International Trade, argues that Section 122 is being stretched far beyond what Congress intended when it wrote the statute during the gold-standard era.

The Three Legal Arguments

The states' challenge rests on three distinct legal theories. Each attacks a different aspect of the administration's use of Section 122.

1. Wrong Statute, Wrong Problem

Section 122 was enacted in 1974 to address international monetary crises — specifically, balance-of-payments emergencies linked to the collapse of the Bretton Woods gold-standard system. The states argue that using it to address trade deficits is a fundamental misapplication. Trade deficits and balance-of-payments crises are economically distinct concepts, and the statute's legislative history makes clear Congress was thinking about currency instability, not import competition.

2. Separation of Powers

The states argue that even if Section 122 could theoretically apply, the Constitution gives Congress the power to regulate foreign commerce (Article I, Section 8). Allowing the President to impose broad tariffs under a vague “balance of payments” authority would effectively transfer Congress's taxing power to the executive branch — exactly the kind of structural concern the Supreme Court flagged in Learning Resources.

3. 1974 Trade Act Consistency Requirements

Section 122 includes specific procedural requirements, including that any tariff actions be consistent with overall U.S. trade obligations and policy. The states argue the administration's blanket 15% tariff on virtually all imports from virtually all countries fails this test — it's not a targeted response to a specific monetary imbalance, it's a sweeping protectionist measure dressed up as balance-of-payments policy.

Why This Matters for Importers

This lawsuit creates a second legal front against presidential tariff authority, running in parallel with the ongoing IEEPA refund process. Here's what importers should understand:

• • Section 122 tariffs already have a built-in expiration. Under the statute, these tariffs are limited to 150 days unless Congress votes to extend them. That clock started February 24, making the expiration date approximately July 23, 2026.
• • A successful lawsuit could accelerate the end. If the CIT strikes down Section 122 tariffs before July, importers may be entitled to refunds on those duties too — on top of the IEEPA refunds already ordered.
• • The recent increase to 15% strengthens the legal case. Raising the rate undercuts the administration's argument that this is a measured response to a specific monetary situation.
• • Document everything. If Section 122 tariffs are eventually struck down, importers who preserved records of duties paid will be best positioned for refunds.

Tomorrow's CIT Conference Adds Urgency

The timing is not coincidental. Tomorrow (March 6), the CIT holds its closed conference on IEEPA refund procedures. Judge Eaton will hear the government's proposed plan for processing $130-175B in IEEPA refunds. Today's Section 122 lawsuit adds political and legal pressure to an administration already on its back foot over tariff authority.

The two legal tracks are now running simultaneously:

• • IEEPA refunds: Already ordered by CIT, government expected to appeal, procedures being set tomorrow
• • Section 122 challenge: Just filed, will take months to litigate, but statute expires in July anyway

For the administration, this is a pincer movement. Even if they delay IEEPA refunds through appeals, they're simultaneously defending Section 122 — their only remaining broad tariff authority — against a well-funded coalition of 24 states.

Key Dates Ahead

The Bigger Picture

The Supreme Court's February 20 ruling didn't just end IEEPA tariffs — it signaled that courts are willing to scrutinize presidential tariff authority. Today's 24-state lawsuit applies that same scrutiny to the administration's backup plan. The legal landscape for executive tariffs is shifting fast, and importers need to be prepared for multiple refund scenarios.