Today’s Trade Lawsuit: Supreme Court, Section 122, IEEPA Refunds

The tariff lawsuit explained in the simplest terms: in February 2026 the Supreme Court struck down the sweeping “Liberation Day” tariffs President Trump had imposed under the International Emergency Economic Powers Act, ruling 6–3 that the statute does not authorize tariffs at all. The same day, the administration reimposed a 10 percent global tariff under a different law, Section 122 of the Trade Act of 1974, and that one is now being fought over in its own case. Meanwhile, importers are trying to claw back an estimated $166 billion to $175 billion in duties they already paid under the invalidated regime.

If you are an importer, a buyer trying to understand price changes, or just trying to follow the headlines, there are really three things to track: what the Supreme Court held, what the replacement tariff is and whether it survives, and how refunds are being processed.

What the Supreme Court Held

On February 20, 2026, the Supreme Court ruled in Learning Resources, Inc. v. Trump (consolidated with Trump v. V.O.S. Selections) that IEEPA does not give the president power to impose tariffs. The vote was 6–3. Chief Justice John Roberts wrote the majority opinion, joined by Justices Gorsuch, Barrett, Sotomayor, Kagan, and Jackson.¹

The reasoning was textual and structural. IEEPA, enacted in 1977, lets the president “regulate importation” during a declared national emergency, but it never uses the words “tariffs,” “duties,” or “taxes.” The Court held that “regulate” and “importation” do not add up to a power to tax, and it applied the major questions doctrine to find that Congress had not clearly delegated authority of such “economic and political significance.” Roberts noted that no president in nearly five decades had ever used IEEPA to impose tariffs, and cautioned that “emergency powers tend to kindle emergencies.”²

Justice Kavanaugh dissented, joined by Justices Thomas and Alito. The dissent argued that tariffs are a “traditional and common tool to regulate importation” and that the major questions doctrine was improperly applied.¹

The tariffs at issue were the ones announced on April 2, 2025: a 10 percent baseline duty on virtually all U.S. imports effective April 5, plus higher “reciprocal” rates on 57 countries that took effect April 9. Rates ran from 10 to 50 percent, with especially steep duties on Vietnam (46 percent), Cambodia (49 percent), and Lesotho (50 percent). Canada and Mexico were largely exempted for goods meeting USMCA rules-of-origin standards, and pharmaceuticals, semiconductors, and energy products were carved out.³ The administration had justified them by declaring that trade deficits and drug trafficking constituted national emergencies.⁴ All of that is now unlawful as a basis for tariffs.

One important thing the Court did not decide: whether the government has to refund what it already collected. That question was pushed down to the lower courts, and it is where most of the current fight is happening.¹

The Section 122 Tariff That Replaced Them

Within hours of losing at the Supreme Court, the administration imposed a new tariff under a different statute. President Trump issued Proclamation 11012 invoking Section 122 of the Trade Act of 1974, setting a 10 percent duty on virtually all imports effective February 24, 2026.⁵

Section 122 is a narrower authority than IEEPA. It lets a president impose tariffs of up to 15 percent for a maximum of 150 days, and only to address “fundamental international payments problems” — specifically, “large and serious balance-of-payments deficits.” The administration cited Commerce Department data showing a “severe current account deficit and historically negative net international investment position.”⁶ Many of the IEEPA-era carve-outs carried over, including energy, pharmaceuticals, certain minerals, and USMCA-compliant Canadian and Mexican goods.⁵

On March 5, 2026, a coalition of 24 Democratic-led states, co-led by New York, California, Oregon, and Arizona, sued at the Court of International Trade to block the new tariff. The lead case is State of Oregon et al. v. Donald J. Trump et al., with a parallel suit by small businesses including Burlap and Barrel, Inc. and Basic Fun, Inc. The states argued that the United States does not actually have the kind of balance-of-payments deficits Section 122 contemplates, because the country uses a floating exchange rate rather than the fixed-rate system that existed when Congress wrote the statute in 1974. They also pointed to discriminatory application: exemptions for Canada, Mexico, and several Central American and Caribbean nations, along with 84 pages of product-specific carve-outs.⁷⁸

Where the Section 122 Case Stands

On May 7, 2026, a divided CIT panel ruled the Section 122 tariff unlawful, 2–1. Judges Mark A. Barnett and Claire R. Kelly held that the administration had not shown the “large and serious balance-of-payments deficits” the statute requires, finding that reliance on current-account and goods-trade deficits was inconsistent with the three measurements Congress recognized in 1974: the basic balance, liquidity, and official settlements. Judge Timothy C. Stanceu dissented, arguing the statute does not “freeze economic measurement methodologies in time.”⁹

The relief was narrow. The court entered a permanent injunction only for Burlap and Barrel, Basic Fun, and the State of Washington, and dismissed the other states for lack of standing. For everyone else, Customs and Border Protection kept collecting.¹⁰

Then on June 11, 2026, the Federal Circuit stayed the CIT ruling pending appeal, stating that the administration is “likely to succeed” in overturning it.¹¹ That stay reinstated the tariff for every importer, including the original plaintiffs, while the appeal plays out. The appeal is expected to continue past the tariff’s scheduled expiration date of July 24, 2026, after which Congress would need to act to extend it.¹²

The Refund Fight Over the IEEPA Tariffs

The money at stake is enormous. Estimates put collected IEEPA duties between $166 billion and $175 billion on roughly 34 million shipments between 2025 and early 2026. One figure cited in the refund litigation itself is $166 billion across 53 million entries.¹³¹⁴

How Refunds Are Being Processed

Customs and Border Protection built a system called the Consolidated Administration and Processing of Entries, or CAPE, inside its existing Automated Commercial Environment portal. It launched April 20, 2026. The importer of record or an authorized customs broker files an electronic declaration listing the specific entries on which IEEPA duties were paid. CBP validates the entries, recalculates the duties without the IEEPA component, and transmits approved refunds to Treasury for disbursement, generally within 60 to 90 days.¹⁵

CAPE rolled out in phases, and which phase your entry falls into matters a lot:

Phase 1 covers unliquidated entries and those liquidated within the preceding 80 days. In the first six weeks it processed nearly 8.5 million entries, with roughly $90 billion in claims accepted and about $23 billion approved and transmitted to Treasury by early June 2026.
Phase 2 covers reconciliation and antidumping/countervailing-duty entries, estimated at $28.7 billion, and was scheduled to begin June 29, 2026.
Phase 3 covers “finally liquidated” entries — those where liquidation became final more than 80 days earlier — and was targeted for late July 2026. The government has indicated it will process Phase 3 refunds only for the roughly 4,000 importers who filed lawsuits at the CIT.¹⁶

The Dispute Over Who Gets Paid

That Phase 3 limit is the heart of the current fight. Judge Richard Eaton of the CIT, appointed to oversee IEEPA refund cases, has issued orders holding that all importers who paid IEEPA tariffs are due refunds and that the court can provide relief through a single case rather than requiring every importer to sue. The government disagrees.¹⁴

On June 3, 2026, the Department of Justice filed notices of appeal with the Federal Circuit, arguing that the CIT’s refund orders amount to impermissible universal injunctions under the Supreme Court’s 2025 ruling in Trump v. CASA, and that refunds for finally liquidated entries should go only to importers who filed their own lawsuits.¹⁷¹⁶

To get around that, plaintiff Terry Precision Cycling filed a motion on June 4, 2026, asking the CIT to certify a class of all importers who paid IEEPA tariffs but whose claims cannot be processed through CAPE. Class certification would, in effect, give importers who have not sued the benefit of the refund orders. As of mid-June 2026, the motion is pending before Judge Eaton.¹⁸

The sheer volume of individual suits gives a sense of why this matters. The Court of International Trade received about 2,000 lawsuits in the weeks after the Supreme Court ruling, compared with 252 cases for all of 2024. By mid-March 2026 more than 3,000 tariff suits had been filed over the preceding year, nearly 1,000 of them in a single three-week span. By June 2026, roughly 4,000 importers had sued. Plaintiffs include FedEx, Costco, Toyota subsidiaries, Bumble Bee Foods, and Revlon, alongside small businesses.¹³¹⁹²⁰

What These Lawsuits Do Not Reach

The rulings addressed only tariffs imposed under IEEPA and under Section 122. They do not touch tariffs imposed under other statutes. Lawmakers across the political spectrum have pointed to Section 232 of the Trade Expansion Act and Section 201 of the Trade Act of 1974 as alternative authorities the administration can rely on without new legislation.²¹ Any duty you have paid under one of those regimes is not covered by the IEEPA refund process.

What to Watch Next

Three things will shape where this ends up:

The Federal Circuit’s ruling on the IEEPA refund appeal, which will decide whether importers who did not sue can still get Phase 3 refunds, or whether universal refund orders violate Trump v. CASA.
Judge Eaton’s decision on the Terry Precision Cycling class certification motion, which could sweep in importers who missed the lawsuit window.
The Federal Circuit’s ruling on the Section 122 appeal, and what happens at the July 24, 2026, expiration date — the statute caps these tariffs at 150 days, and extending them would require congressional action.¹²

If you are an importer with IEEPA duties to recover, the practical step today is filing through CAPE for Phase 1 and Phase 2 entries and tracking the Federal Circuit docket for the Phase 3 question. If you are watching the Section 122 side as a buyer or seller, assume the 10 percent tariff stays in place at least until the appeal resolves or the statutory clock runs out, whichever comes first.

1
SCOTUSblog. Supreme Court Strikes Down Tariffs
2
U.S. Supreme Court. Learning Resources, Inc. v. Trump, Opinion
3
CSIS. Liberation Day Tariffs Explained
4
SCOTUSblog. Trump Administration Urges Supreme Court to Uphold Tariffs
5
Wiley Rein. Trump Imposes Section 122 Tariffs After Halting IEEPA Tariffs
6
Holland & Knight. US Court of International Trade Invalidates the Administration’s Section 122 Tariffs
7
Politico. States Sue Trump Over Tariffs
8
New York Attorney General. Attorney General James Leads Lawsuit to Stop Trump Administration’s Latest Illegal Tariffs
9
U.S. Court of International Trade. Oregon v. Trump and Burlap and Barrel, Inc. v. Trump, Opinion
10
ASIL. The U.S. Court of International Trade Invalidates Trump’s 10% Global Tariff
11
Inside U.S. Trade. Appeals Court Says Administration Likely to Succeed in Section 122 Tariff Appeal
12
Sandler, Travis & Rosenberg. Section 122 Tariff Remains in Place Following Appeals Court Ruling
13
Minnesota Lawyer. US Trade Court Tariff Refunds After Supreme Court Ruling
14
Buchalter. CIT Orders CBP to Remove IEEPA Tariffs From Unliquidated Entries
15
U.S. Customs and Border Protection. IEEPA Duty Refunds
16
Holland & Knight. IEEPA Tariff Refund Update: Government Appeals
17
Justia. Trump v. CASA, Inc., 606 U.S. 831
18
Trade Law Daily. US Plaintiffs File Responses to CIT’s Order on Immediate Tariff Refunds, Seek Class Certification
19
Bloomberg. Tariff Refund Lawsuits Surge Amid Uncertainty About US Plans
20
KTVU. List of Companies Suing to Get Trump Tariff Refunds
21
Courthouse News Service. Republicans Call for Legislative Fix After SCOTUS Nixes Trump Tariff Power