Section 122 Tariffs After the Federal Circuit Stay: The July 24 Sunset and What Importers Should Do Now

Most of the coverage of the Section 122 tariff fight stopped at one of two headlines: "court strikes down 10% global tariff" in May, or "appeals court reinstates it" in June. Both are technically accurate, and both miss what actually changed for importers, which is close to nothing. The Court of International Trade's May 7 ruling never applied to more than three plaintiffs, and the Federal Circuit's stay on June 11 paused even that narrow win. If you're paying the 10% Section 122 surcharge on entries filed this month, you were paying it in April too, and you'll keep paying it through the appeal. The deadline that actually belongs on your calendar isn't a court date. It's July 24, 2026, the day the statute itself says the surcharge has to stop.

How a 1974 Trade Act Provision Became the IEEPA Replacement

Section 122 of the Trade Act of 1974, codified at 19 U.S.C. § 2132, sat almost entirely unused for fifty years. It lets the President impose a temporary import surcharge of up to 15% ad valorem, import quotas, or both, for up to 150 days, to deal with a "large and serious" balance-of-payments deficit, head off an imminent dollar depreciation, or cooperate with other countries on a balance-of-payments disequilibrium. Congress wrote it as a narrow, time-boxed backstop, a deliberately smaller substitute for the open-ended authority Nixon used under the Trading with the Enemy Act in 1971.

It became relevant again on February 20, 2026, when the Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump (consolidated with Trump v. V.O.S. Selections, Inc.) that IEEPA doesn't authorize tariffs at all. See our explainer on the IEEPA authority for how that emergency-powers theory worked and why the Court rejected it. That ruling wiped out both the fentanyl-related country tariffs and the broader "reciprocal" tariffs that had applied to nearly every trading partner. The administration needed a new legal basis fast, and Section 122 was the only unilateral tariff authority on the books that didn't require a Section 232 national-security investigation or a Section 301 unfair-trade-practice finding first. Proclamation 11012 followed within days, published in the Federal Register on February 25 and effective February 24, imposing a flat 10% surcharge on most imports.

The May 7 Ruling Helped Three Companies, Not the Market

On May 7, the Court of International Trade struck down Proclamation 11012 in a consolidated case, Oregon v. Trump and Burlap & Barrel, Inc. v. Trump (Slip Op. 26-47). The panel split 2-1. Chief Judge Mark Barnett and Judge Claire Kelly held that "balance-of-payments deficit" in the 1974 statute means what Congress understood it to mean in 1974: a deficit measured by one of three specific metrics discussed in the Senate Finance Committee reports at the time, basic balance, liquidity, or official settlements. Proclamation 11012 cited a trade deficit, a current account deficit, and a negative net international investment position instead. The majority held that none of those satisfy the statute. Judge Stanceu dissented, both on the merits and on whether the court should have reached the merits at all on a preliminary-injunction record.

Here's the part that didn't make most headlines: the court declined to issue a nationwide injunction. Most of the state plaintiffs lost on standing because they weren't importers of record and could only show indirect economic harm. "Costs to one plaintiff is not an appropriate basis for the imposition of a universal injunction," the court wrote. The permanent injunction that resulted applies to exactly three parties: Burlap & Barrel, Inc., Basic Fun, Inc., and the State of Washington. Everyone else's entries kept accruing the 10% surcharge the day after the ruling came down, same as the day before.

The Federal Circuit's Stay Erased Even That

The government appealed on May 8, the day after the ruling. The Federal Circuit issued an administrative stay on May 12 while it considered the government's request for a stay pending appeal, then granted that request on June 11. The court's reasoning is what matters here: it found the government "likely to succeed on appeal," because the legislative history "strongly called into question" the CIT majority's narrow reading of which deficit measures count. That's not a ruling on the merits. It's a prediction about the merits, made on an expedited record, and it can still go the other way once the case is fully briefed.

The practical effect lands on your entries right now. CBP can resume collecting the 10% surcharge from Burlap & Barrel, Basic Fun, and Washington State too, the three parties that won in May. Nobody currently has injunctive protection from Section 122 duties. If a headline last week told you the tariffs were "reinstated," that's accurate only in the narrowest technical sense, since for nearly every importer nothing was ever taken away.

The Deadline That Has Nothing to Do With the Appeal

Everything above is about whether the courts will eventually invalidate the surcharge. There's a separate question that doesn't depend on any judge: does the statute itself let the surcharge keep running past July 24, 2026?

Section 122 caps a surcharge at 150 days "unless such period is extended by Act of Congress." Proclamation 11012 took effect February 24. Add 150 days and you land on July 24, 2026, a little over a month out. Congress hasn't passed an extension, and there's no sign one is moving. That leaves three paths once July 24 arrives:

• Let it lapse. The 10% surcharge disappears on schedule, and duty rates drop back to whatever the baseline was before February, plus whatever Section 301 or Section 232 exposure already applies independently.
• Re-invoke Section 122 with a new proclamation. Nothing in the statute bars a second 150-day surcharge, but the administration would need a balance-of-payments justification that survives the exact critique the CIT majority just made, or risk a faster second challenge against a now-developed record.
• Shift the load to a different authority. The administration has already shown it will reach for an alternate tariff vehicle for other product categories; the June 2026 restructuring of steel, aluminum, and copper duties under Section 232 covers many import lines without touching Section 122 at all. A similar substitution elsewhere is plausible if Section 122 lapses.

None of these outcomes has been announced. What's certain is that the clock on the current proclamation runs out in roughly a month, independent of whatever the Federal Circuit eventually decides.

What to Actually Do Before July 24

The appeal and the sunset date call for different responses.

Preserve your refund rights on Section 122 entries now, regardless of how confident you feel about the outcome. The mechanism is the same one processing the wave of IEEPA refunds: file a protest under 19 U.S.C. § 1514 within 180 days of liquidation, on CBP Form 19, and don't wait for the Federal Circuit to rule before doing it. We've covered how the CAPE refund process worked for IEEPA entries; if the Federal Circuit eventually affirms the CIT, Section 122 refunds will likely run through that same administrative channel, and entries without a timely protest on file won't be eligible no matter what the final ruling says.

Model both July 24 scenarios in your landed cost forecasts, not just the one you think is more likely. An importer bringing in $400,000 a month of patio furniture from Vietnam is currently paying $40,000 a month in Section 122 surcharge on top of base duty. If the surcharge lapses on schedule, that cost disappears starting with entries filed July 25 forward. If it's replaced by a new proclamation or a different authority, it might not. Running both numbers through a landed cost calculation now keeps your pricing and sourcing decisions from running a month behind whatever CBP actually does.

Watch for a CSMS message on how CBP will treat entries that straddle July 24. CBP has historically issued guidance on shipments that depart before a rate change but arrive or get entered after it. Don't assume the entry date or the departure date controls without checking. That distinction has tripped up importers in past tariff transitions.

Track the rate, not just the case. The operative duty rate on your products could move three separate ways this summer: the appeal, the July 24 sunset, or a new proclamation closing the gap. A saved watchlist alert on your HTS codes flags a rate change within a day of when the underlying overlay data updates, faster than waiting for the next law firm client alert to land in your inbox.

Key Takeaways

• The Federal Circuit's June 11 stay didn't reinstate anything for most importers. The CIT's May 7 win never applied beyond Burlap & Barrel, Inc., Basic Fun, Inc., and the State of Washington, and the stay paused even that narrow relief.
• The CIT's holding turns on a specific statutory reading: "balance-of-payments deficit" in 19 U.S.C. § 2132 means basic balance, liquidity, or official settlements as understood in 1974, not the trade deficit or current account deficit cited in Proclamation 11012.
• Separate from the appeal, Section 122's 150-day statutory ceiling puts a hard expiration on the current surcharge at July 24, 2026, unless Congress passes an extension.
• File a 19 U.S.C. § 1514 protest on CBP Form 19 within 180 days of liquidation on Section 122 entries now. Waiting for the Federal Circuit to rule before protesting risks missing the deadline regardless of the outcome.
• Build landed cost models for both a July 24 lapse and a replacement-authority scenario. Don't assume CBP's next move before a CSMS message confirms it.

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Whatever happens at the Federal Circuit, the duty rate on your products is more likely to change in the next six weeks than it has in months. TariffClassify shows the full rate stack for any HTS code, including Section 122, Section 301, and AD/CVD exposure, so a rate change doesn't surprise you mid-shipment. Check your product's current rate stack free.