The 90-Day Countdown: Your 10% Global Tariff Has a Court Date and an Expiration Date

The 10% tariff you're paying on virtually every import into the United States has never been tested in court, has never been used by any president in history, and expires on July 24, 2026. A three-judge panel just spent three hours questioning whether it's legal. Here's what importers need to know before the clock runs out.

On February 20, 2026, the Supreme Court handed down its landmark decision in Learning Resources, Inc. v. Trump, striking down the IEEPA tariffs in a 6-3 ruling that said the president lacked authority to unilaterally impose tariffs of "unlimited amount, duration, and scope" without clear congressional authorization.

The tariffs were dead. For about four hours.

That same day, President Trump signed a proclamation invoking Section 122 of the Trade Act of 1974 — a law so obscure that no president had ever used it — to impose a 10% ad valorem surcharge on nearly all U.S. imports. The new tariffs took effect February 24 at 12:01 a.m. Four days after the Supreme Court told the administration it couldn't impose global tariffs under one law, it imposed global tariffs under another.

Now Section 122 is getting its own day in court. And unlike the IEEPA fight, this one comes with a built-in expiration date that changes everything.

What Section 122 Actually Is — and Why It's Never Been Used

Section 122 of the Trade Act of 1974 (19 U.S.C. § 2132) was written for a very specific economic moment. In the early 1970s, the United States had just abandoned the gold standard, and Congress wanted to give the president a fast-acting tool to stabilize the dollar if foreign trade threatened to drain U.S. reserves.

The law allows the president to impose tariffs of up to 15% ad valorem for a maximum of 150 days to address "fundamental international payments problems," including "large and serious United States balance-of-payments deficits." After 150 days, the tariffs automatically expire unless Congress passes legislation extending them.

Three features make Section 122 unusual:

• It's temporary by design. The 150-day clock is hard-coded into the statute. No executive order can extend it.
• It requires a specific economic trigger. The president must find a "large and serious" balance-of-payments deficit — not just a trade deficit, but a broader payments problem.
• It must be non-discriminatory. The statute mandates "broad and uniform application," though it allows limited product exceptions and the ability to focus on countries with "large or persistent balance-of-payments surpluses."

Before February 2026, Section 122 was a historical footnote — a Cold War–era emergency tool that had gathered dust for half a century. Its sudden resurrection as the backbone of U.S. tariff policy surprised even seasoned trade lawyers.

The Legal Challenge: 24 States and a Spice Importer

Two lawsuits are now challenging the Section 122 tariffs at the U.S. Court of International Trade (CIT).

The first, State of Oregon v. Trump (CIT Case No. 26-01472), was filed on March 5, 2026, by 24 state attorneys general. The states argue two things: first, that the statutory conditions for invoking Section 122 have not been met; and second, that the tariffs the president imposed go beyond the scope of what the statute authorizes.

The second, Burlap and Barrel, Inc. v. Trump (CIT Case No. 26-01606), was filed on March 9 by the Liberty Justice Center on behalf of a New York spice importer and a Florida toy company. Their argument goes further: under the current system of floating exchange rates, they contend, a true balance-of-payments deficit is economically impossible. The entire premise of the tariffs, they say, doesn't exist.

Both cases landed before the same three-judge CIT panel: Judges Mark Barnett, Claire Kelly, and Timothy Stanceu.

The Marathon Hearing: Three Hours, One Fundamental Question

On April 10, 2026, the CIT held oral arguments in a three-hour hearing that cut straight to the heart of the dispute: What is a "balance-of-payments deficit," and does the United States have one?

This isn't a technicality. It's the entire legal ballgame.

A trade deficit measures the gap between what a country imports and what it exports — and the U.S. ran a goods trade deficit of roughly $1.2 trillion in 2025. That number is real and large.

But a balance-of-payments deficit is something different. The balance of payments includes the trade deficit plus capital flows — foreign investment, financial asset purchases, and other transactions. Under the IMF's standard double-entry accounting, a country's total balance-of-payments position always nets to zero. The U.S. has a current account deficit (driven by the trade deficit), but it's offset by a capital and financial account surplus as foreign investors pour money into U.S. markets.

Judge Stanceu was the most vocal on the panel, repeatedly questioning both sides about how 1974 economic terminology translates to 2026 reality. "We're not quite sure how to translate 1974 into 2026," he said, "but we do know that the 'balance of trade deficit' was not the same thing as the 'balance of payments deficit.'"

The DOJ's Brett Shumate argued that the U.S. trade deficit contributes to a broader "balance of payments" deficit and creates a "large, serious international payments problem." The states countered that the president is cherry-picking only the current account while ignoring the capital account that offsets it.

The Awkward Precedent Problem

Here's where the legal landscape gets complicated for the challengers.

When the CIT struck down the IEEPA tariffs in its May 2025 ruling, it actually pointed to Section 122 to support its conclusion. The court wrote that Section 122 "removes the President's power to impose remedies in response to balance-of-payments deficits, and specifically trade deficits, from the broader powers granted to a president during a national emergency under IEEPA." In that ruling, the CIT characterized the trade deficit as "a type of balance-of-payments deficit" — language that now cuts in the administration's favor.

The states are now asking the same court to reverse its own characterization. That's a tough ask.

And there's a practical dimension too. As one trade law professor noted, the CIT judges may be reluctant to strike down a tariff that expires in three and a half months anyway. "I just don't see them sticking their neck out on this one, given how temporarily it's in place and how much discretion these courts give to the president," observed one legal analyst.

That said, the CIT struck down the IEEPA tariffs roughly two weeks after oral arguments last May. A ruling could come at any time.

Why the July 24 Expiration Changes Everything

Whether the CIT strikes down the Section 122 tariffs or not, they expire on July 24, 2026 — exactly 150 days after they took effect. The president cannot extend them unilaterally. Only an act of Congress can keep them in place past that date, and no such legislation is moving.

This makes Section 122 a bridge tariff — a placeholder while the administration builds a longer-term tariff regime under authorities that don't come with expiration dates.

That replacement strategy is already taking shape:

The administration has explicitly stated it intends to replace the Section 122 surcharge with tariffs under Section 301 and Section 232 before the expiration date. Trade experts widely view Section 122 as a temporary bridge — not the destination.

The Three Scenarios You Should Be Modeling

Every importer should be running numbers on three potential outcomes for what happens after July 24:

Scenario 1: Section 122 expires with no replacement. Your import costs drop by 10% on products not already covered by Section 232 or other tariffs. This is the optimistic case, but most trade experts consider it unlikely given the administration's stated intentions.

Scenario 2: Section 301 tariffs take effect. Country-specific tariffs replace the blanket 10%. Depending on your country of origin, rates could be higher or lower than 10%. USTR investigations are targeting roughly 100 countries — but the rates will vary based on the specific findings for each country. Products from countries with larger trade surpluses or worse forced-labor records may face rates well above 10%.

Scenario 3: Expanded Section 232 tariffs cover your products. If your goods contain steel, aluminum, copper, or fall into product categories under active Section 232 investigation (auto parts, lumber, semiconductors, pharmaceuticals), you may face 25% to 100% tariffs that replace the 10% surcharge with something far more expensive. The revised Section 232 framework effective April 6 already imposes 50% on high-metal-content products, 25% on most derivatives, and a minimum 15% floor on other derivative products.

The uncomfortable truth: for many importers, the 10% Section 122 rate may turn out to be the cheapest tariff they'll see. If your products are heading toward Section 232 or Section 301 coverage, the July 24 expiration isn't relief — it's a transition to something potentially worse.

What to Do in the Next 90 Days

1. File protests on Section 122 duties now. If the CIT or a higher court ultimately strikes down the Section 122 tariffs, you'll want to have preserved your right to a refund. Filing a CBP protest (19 U.S.C. § 1514) within 180 days of liquidation is the standard mechanism. Don't assume the tariffs will survive — the IEEPA experience taught importers that filing protests early is the difference between getting refunds and watching the deadline pass.

2. Map your exposure to replacement tariffs. For your top 20 import entries by volume, identify which Section 232 and Section 301 investigations could affect your products. The USTR's Federal Register notices list the specific countries and product categories under investigation. If your goods are in scope, model the potential duty rates now — not after July 24.

3. Consider accelerating shipments before July 24. If your scenario modeling shows that replacement tariffs are likely to be higher than 10% for your products — particularly anything heading toward Section 232 coverage at 25-50% — accelerating shipments to arrive before July 24 locks in the known 10% rate. This is especially relevant for steel and aluminum derivative products, pharmaceutical ingredients, and auto parts.

4. Participate in Section 301 comment periods. Unlike IEEPA tariffs or Section 122, Section 301 gives your company a voice. USTR is required to accept public comments during the investigation process. If your products or countries of origin are under investigation, submitting comments is the single most direct way to influence the outcome. Comment deadlines are running through April and May 2026.

5. Review your HTS classifications for Section 232 exposure. The revised Section 232 framework creates a multi-rate system based on metal content: 50% for high-metal-content products, 25% for most derivatives, 15% minimum for other derivatives, and an exemption for products with less than 15% metal content by weight. The difference between classifying a product as a "derivative" versus an "article thereof" can mean a 35-percentage-point swing in duty rates. Get your classifications right before CBP does it for you.

6. Talk to your customs broker about a refund strategy. The IEEPA refund process through CBP's new CAPE system is live as of April 20. If you paid IEEPA tariffs before they were struck down and Section 122 tariffs afterward on the same products, you need a coordinated refund and protest strategy that covers both programs.

What to Watch Next

The next 90 days will determine the tariff landscape for years to come. Key dates:

• Any day now: CIT ruling on Section 122 legality. The court ruled on IEEPA tariffs within two weeks of oral arguments last May. A decision could drop without warning.
• April 28, 2026: CIT has ordered CBP to file a progress report on Phase 1 of the CAPE refund system.
• Late May/June 2026: USTR Section 301 investigation comment periods close. Final determinations could come within weeks.
• July 24, 2026: Section 122 tariffs expire. Whatever replaces them — Section 301, expanded Section 232, or nothing — takes effect.
• Summer 2026: New Section 301 tariffs likely finalized, creating a country-specific tariff regime to replace the flat 10%.

The Bigger Picture

The Section 122 saga illustrates something fundamental about the current tariff environment: the legal authority matters as much as the rate. IEEPA tariffs were struck down not because 10% was too high, but because the president used the wrong law. Section 122 may fall for the same reason — not because tariffs are illegal, but because the statutory trigger doesn't match economic reality.

For importers and brokers, the lesson is that tariff rates are no longer just a classification question. They're a legal question. Knowing your HTS code isn't enough if the underlying tariff authority is being challenged in court. Every entry you file under Section 122 today is a potential refund claim tomorrow — but only if you've preserved your rights by filing protests.

TariffLens helps you track which tariff authorities apply to your classifications, so you can spot exposure to legal challenges and replacement tariffs before they hit your bottom line.

This article is for informational purposes only and does not constitute legal, tax, or customs advice. Consult a licensed customs broker or trade attorney for guidance specific to your situation.