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- What the Supreme Court Said, and the Road Map It Left Behind
- Section 122’s Balance-of-Payments Trigger and the End of Fixed Exchange Rates
- How the 150-Day Sunset Shapes Litigation Strategy
- Procedural Steps for Importers Challenging the Section 122 Surcharge
- The Administration’s Remaining Tariff Authorities Beyond Section 122
- What a Successful Section 122 Challenge Would and Would Not Accomplish
The White House needed four hours. That’s how long passed between the Supreme Court striking down President Trump’s primary tariff program on February 20, 2026, and the announcement of a replacement authority. The new tariff would rest on Section 122 of the Trade Act of 1974, a statute that had sat unused for fifty years and had never been invoked by any president. By the following afternoon, Trump had raised the rate to 15 percent, the statutory maximum, framing it as a revenue-generating successor to the struck-down program.
The speed of that pivot raised an immediate question among trade lawyers: Was this a prepared fallback, or an improvisation? The answer, evident from the proclamation’s statutory language, appears to be both. The legal architects of the tariff program had been planning for different scenarios for months.
For importers who successfully challenged the IEEPA tariffs in Learning Resources, Inc. V. Trump, the question is now whether to mount a new challenge on different legal terrain. Section 122 is not simply IEEPA by another name. It is narrower in scope, more clearly authorized by Congress, and in some ways easier to defend in court.
But its narrower scope is also a litigation target. Explicit statutory triggers create clearer grounds for judicial review. The 15 percent cap is a hard ceiling. The 150-day duration limit means the tariff expires automatically unless Congress acts, a feature that introduces mootness problems and strategic timing questions that did not exist under IEEPA’s emergency-powers framework.
The math for importers has changed. The question is no longer whether the President exceeded the bounds of a vague statute. Now it is whether the specific conditions Section 122 requires have materialized.
What the Supreme Court Said, and the Road Map It Left Behind
The February 20 ruling was precise. Chief Justice John Roberts, writing for six justices, ruled that the word “regulate” in IEEPA’s grant of authority to “regulate importation” does not include the power to impose tariffs. Tariffs are a form of taxation, and taxation requires clear congressional authorization.
IEEPA contained no such authorization, not in its text, not in its history, and not in fifty years of presidential practice before this administration.
But in reaching that conclusion, the Court remarked on something the administration had already prepared for. “When Congress grants the power to impose tariffs, it does so clearly and with careful constraints,” Roberts wrote. It was an implied road map. Congress had granted tariff authority in multiple places, with careful constraints. Section 122 of the Trade Act of 1974 was Exhibit A.
That provision came about in 1974 as a direct response to President Nixon’s 1971 use of the Trading with the Enemy Act to impose a 10 percent surcharge on all imports to address a balance-of-payments crisis.
When that surcharge was challenged in court, the Court of Customs and Patent Appeals — a predecessor to today’s Federal Circuit — upheld it, though with considerable uncertainty about the statute’s scope.
Congress took the hint. The 1974 legislation explicitly empowered the President to impose temporary import surcharges, not to exceed 15 percent, in situations of fundamental international payments problems. The statute included a 150-day time limit unless Congress extended it. It also required that any surcharge be of broad and uniform application across product categories.
For five decades, the provision sat on the books, never invoked. Every trade president from Gerald Ford through Joe Biden had faced trade deficits and international economic crises without once reaching for this authority.
Fifty years had passed without any president using this explicit statutory grant of tariff authority. Did that silence suggest Congress had intended to narrow presidential tariff power?
The Learning Resources Court did not directly answer that question, and that is one of several issues the ruling left unresolved. What standard of review applies when a president invokes Section 122’s balance-of-payments trigger? Can successive proclamations reset the 150-day clock? Does the statute’s fixed-exchange-rate origins limit its modern application?
The implication was clear enough: Section 122 was the statute Congress had intended for emergency tariff situations. IEEPA was not. But the Court said nothing about how those questions should be answered.
Within hours of the ruling, the administration filed the Section 122 proclamation. The proclamation was grounded primarily in the balance-of-payments trigger, though it also asserted that fundamental international payment problems harm U.S. national security interests.
Trump declared that his advisors had determined that an import surcharge was required to deal with “large and serious United States balance-of-payments deficits.” He also asserted that fundamental international payment problems “significantly harm United States national interests, including economic and national security interests.” The proclamation initially imposed a uniform 10 percent surcharge, but Trump raised the rate to 15 percent on February 21 — before the original rate even took effect on February 24. The surcharge runs for 150 days.
Section 122’s Balance-of-Payments Trigger and the End of Fixed Exchange Rates
Section 122 does not grant the President free rein to impose tariffs whenever he feels the economy needs rebalancing. The statute lists three specific situations when tariffs can be imposed: to deal with “large and serious United States balance-of-payments deficits,” to prevent an imminent and significant depreciation of the dollar, or to cooperate with other countries in correcting an international balance-of-payments imbalance. Each trigger is supposed to correspond to a genuine economic crisis. A persistent trade deficit, on its own, does not automatically qualify.
And here is where the fifty-year dormancy of Section 122 becomes legally significant. The United States has not operated under a fixed exchange rate regime since 1973, when it abandoned the Bretton Woods system and moved to floating exchange rates. Under a floating rate, the exchange rate adjusts automatically to balance international flows of money.
If Americans import more than they export, the dollar depreciates. That makes U.S. Goods cheaper abroad and foreign goods more expensive domestically, which reduces imports.
Standard economic theory holds that balance-of-payments deficits are effectively impossible under a floating exchange rate system. The exchange rate itself prevents persistent imbalances from accumulating. Peter Berezin, chief global strategist at BCA Research, stated this bluntly in the hours after the Supreme Court ruling: “A balance of payments deficit is not the same thing as a trade deficit.” He went on to argue that a flexible exchange rate, as the U.S. currently uses, makes a true balance-of-payments deficit effectively impossible, .
Alan Reynolds, a senior fellow at the Cato Institute, echoed the point. He argued that the trade deficit is fully funded by the surplus of foreign investment flowing into the U.S. (the capital account surplus) and that there is no overall balance-of-payments deficit to justify the tariff. Bryan Riley, formerly a senior policy analyst in trade policy at the National Taxpayers Union, offered the sharpest historical framing: that Section 122 only makes sense under a fixed exchange rate, which the U.S. abandoned more than 50 years ago, .
When Congress passed it in 1974, the world was still shifting from fixed to floating exchange rates. Lawmakers wanted the President to have tools to manage that shift.
By the time the statute was finalized, the floating rate system was already in place, which arguably made Section 122 unnecessary — but no one thought to revisit the provision. Now, five decades later, the Trump administration is using it for a situation, the U.S. Trade deficit, that economists argue does not constitute the “fundamental international payments problem” the statute was designed to address.
The administration’s response, laid out in the White House fact sheet, tries to get around this objection by pointing to the current account deficit as evidence of a balance-of-payments problem. The current account includes trade in goods and services, plus things like foreign aid and remittances. It is not identical to the trade deficit in goods alone, though they are correlated.
By pointing to the current account deficit, the administration is trying to satisfy the statutory trigger. But the statutory language says “balance-of-payments deficits,” not “current account deficit.” A court reading this language can ask whether the President correctly understood what the statute meant. It can also ask whether the trigger was designed for a fixed exchange rate world where such deficits were possible.
IEEPA’s language, “unusual and extraordinary threat,” is so broad that courts struggled with its application to specific circumstances such as trade deficits, though the Supreme Court ultimately ruled IEEPA does not authorize tariffs on other grounds. Section 122’s language is more specific, which makes it easier to enforce but also easier to violate. A court can point to the statutory text and say: this statute was written for a particular economic condition; that condition does not exist today; therefore, the President cannot use this statute. With IEEPA, the Court had to rely on broader legal principles about when Congress must speak clearly before giving presidents major powers. A Section 122 challenge might not need to reach those constitutional issues at all. As we covered in our piece on how Congress handed presidents tariff power and the Court took it back, the Court leaned heavily on the principle that Congress must explicitly authorize major presidential powers in Learning Resources. That principle may be largely beside the point in the next round of litigation.
On the other hand, the administration has a stronger argument under Section 122 than it had under IEEPA, precisely because Congress explicitly authorized tariffs here. Some legal defenders of the tariff program argue that the President has the freedom to decide whether the statutory triggers are satisfied. They also argue that courts should yield to his judgment on factual questions about economic conditions.
Under a recent Supreme Court ruling (Loper Bright), courts no longer automatically defer to how government agencies interpret laws. Judges must read the statutes themselves. But that does not necessarily mean courts give less weight to the President’s factual findings about economic conditions. A court might reason that the statutory language gives the President the freedom to decide whether a balance-of-payments crisis exists. Checking whether his decision was clearly unreasonable stops short of second-guessing his economic judgment on the underlying facts. Under that standard, the administration’s proclamation might survive challenge.
Importers have strong arguments that the statutory trigger was not met. The administration has strong arguments that the statute explicitly delegates this determination to the President. A court could go either way, depending on how it frames the standard of review.
How the 150-Day Sunset Shapes Litigation Strategy
The 150-day sunset is not just a policy feature. It is a litigation variable that changes the strategic math for every importer considering a challenge.
The tariff runs from February 24 through July 24, 2026. If an importer files an entry for goods in early March and the Section 122 surcharge is assessed at the port, U.S. Customs and Border Protection will eventually finalize the paperwork on that shipment and assess the final duties owed. The importer then has 180 days to file a protest under 19 U.S.C. § 1514. If CBP denies the protest, the importer can file a formal legal challenge in the Court of International Trade.
By this point, four to six months may have elapsed. An importer seeking a preliminary injunction to stop tariff collection before the tariff expires would need to move quickly. That means filing a motion for a temporary restraining order on an expedited basis.
How fast can the CIT move? In the IEEPA litigation, the District Court for the District of Columbia issued a preliminary injunction stopping collection of the tariffs within months of the case being filed. But the CIT is a specialized court with a smaller docket. It does not always have the same emergency-relief apparatus. A careful litigator would assume that a motion for preliminary injunction could take weeks to months, even on an expedited basis.
This creates a real dilemma. If the tariff expires on July 24 before a court rules on a preliminary injunction, the importer might win on the merits but get no practical relief. The tariff will have already elapsed. Conversely, if an importer wants to establish precedent that Section 122 cannot be invoked for these purposes, the 150-day deadline does not prevent that precedent from being established. It means the precedent applies to future tariffs, not this one.
Some trade lawyers have suggested that the administration might deliberately let the Section 122 tariff expire and then issue a new proclamation in early August, resetting the 150-day clock indefinitely. Section 122 does not explicitly prohibit successive proclamations, but it also does not clearly authorize them. A court could find that the statute contemplates a single 150-day tariff period. Under that reading, the period could be extended by Congress but not by the President acting alone to issue a second proclamation.
Georgetown University law professor Kathleen Claussen has addressed the ambiguity. She observed that no president has previously invoked Section 122 to impose tariffs, and “it’s hard to see what would stop him from trying to” unilaterally extend it by a further 150 days,
The voluntary cessation doctrine might allow a court to hear a case challenging a tariff that has expired, if the court believes the administration will reinstate it. But this is uncertain territory, and not all judges will apply the doctrine broadly.
Procedural Steps for Importers Challenging the Section 122 Surcharge
For importers with duties assessed under the Section 122 surcharge, the practical steps are clear, but the timing is tight.
First: pay the surcharge under protest. When CBP assesses the surcharge (currently 15 percent following the rate increase described above), the importer or customs broker must make sure the customs paperwork notes that the surcharge is being paid under protest. This protects the right to challenge the surcharge later. Paying without protest may give up the right to seek a refund even if the surcharge is later found to be illegal.
Second: file a CBP protest. Under 19 U.S.C. § 1514, an importer has 180 days from liquidation to file a written protest with CBP. The protest must state the grounds for challenge, that the surcharge is not authorized by Section 122, or that the statutory triggers have not been satisfied. CBP will either grant the protest and refund the surcharge, or deny it.
Third: if CBP denies the protest, file a summons in the Court of International Trade. The CIT has sole jurisdiction over challenges to tariff actions arising out of laws providing for tariffs, and a Section 122 challenge falls clearly within that jurisdiction. The right to sue is simple: any importer who pays a duty has a right to challenge its legal basis.
Fourth: consider emergency relief. An importer who wants to stop CBP from continuing to collect the surcharge while litigation goes on can seek a temporary restraining order or preliminary injunction. That requires showing a reasonable chance of winning the underlying case. It also requires showing harm that can’t be undone or fully compensated later if collection continues, that the overall fairness of the situation favors the importer, and that the public interest supports blocking the tariff. Proving these elements in a tariff challenge is not easy. But the IEEPA litigation showed it is not impossible.
Fifth: submit written legal arguments on the core question and await a CIT ruling. The importer’s brief will argue that Section 122 does not authorize the tariff, or that the statutory triggers have not been satisfied. The government will defend the tariff as authorized and based on a valid presidential determination. A ruling from the CIT will likely follow within months.
Sixth: appellate review. A CIT ruling in favor of the importer can be appealed by the government to the Federal Circuit; a ruling for the government can be appealed by the importer. Given the 150-day window, both sides are likely to seek expedited review.
Throughout this process, strategic timing is everything. File too late and the tariff may expire before relief is granted. File too early and the case might be dismissed before a ruling. Work with experienced trade counsel who understands CIT procedure and the mootness doctrine as applied to tariffs. The window for decision-making is not generous.
The Administration’s Remaining Tariff Authorities Beyond Section 122
Section 122 is not the administration’s only remaining option. Understanding where it sits in the broader menu of tariff authorities helps importers judge whether winning a Section 122 challenge ends the tariff program, or merely redirects it.
The most legally durable remaining authorities are Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974. Section 232 authorizes the President to impose tariffs on imports that “threaten to impair” national security. Courts have consistently held that national security determinations are largely within the President’s discretion and that the statutory language is not unconstitutionally broad. Congress clearly told the President to decide, and courts are reluctant to substitute their judgment for the President’s on national security matters.
Section 301 authorizes the President, through USTR, to investigate whether a foreign country’s acts or practices burden U.S. Commerce and, if so, to impose retaliatory tariffs. Both authorities require formal investigative processes and produce extensive factual records. That makes them harder to challenge and harder to strike down.
Section 122 sits between these strong explicit delegations and the vague emergency authority of IEEPA. It is more specific than IEEPA, but less procedurally demanding than Section 232 and Section 301. The provision has never been litigated. That means no established precedent guides how courts should review presidential determinations under it. That cuts both ways for the administration. A court could set precedent unfavorable to the administration on how to read the balance-of-payments trigger. But the absence of precedent also means there is no body of case law built around a skeptical standard of review.
The weakest statutory authority, from a litigation standpoint, is Section 201 of the Trade Act of 1974, the “escape clause” or safeguard mechanism. That provision requires the U.S. International Trade Commission to conduct a formal investigation and find that imports are a “substantial cause of serious injury” to a domestic industry before the President can act. Unlike Section 232 and Section 301, the President does not have much freedom in making triggering findings under Section 201. The statute limits executive action by requiring an independent agency to make the injury finding first. If the ITC does not find injury, the President generally cannot act. That procedural requirement makes Section 201 the most open to judicial review of the tariff authorities.
For the Trump administration’s purposes, Section 122 is therefore the sweet spot: more clearly delegated by Congress than IEEPA, but not so procedurally demanding as to require extensive ITC or Commerce Department findings. It is fast-moving, high-impact, and never litigated.
A court ruling that the statutory triggers were not satisfied would extend to any future Section 122 proclamation. A ruling upholding the tariff, on the other hand, would strengthen the administration’s hand in future uses and in defending the provision alongside other tariff authorities.
What a Successful Section 122 Challenge Would and Would Not Accomplish
Justice Brett Kavanaugh, joined by Justices Clarence Thomas and Samuel Alito in dissent, argued that the President should have more flexibility in choosing which tariff statutes to invoke. He also argued that even if IEEPA did not authorize broad tariffs, Section 232, Section 301, and other statutes did. His dissent suggested the majority opinion might amount to little more than saying “the President checked the wrong statutory box.” If Kavanaugh’s view gains traction in subsequent cases, the real effect of Learning Resources might be to establish that the President can impose tariffs. He simply has to point to the right statute.
The administration’s lawyers can search for statutory authorities the same way plaintiffs’ lawyers look for the most favorable court to file in. Winning a challenge to Section 122 might uphold the rule of law but leave the tariff program largely intact, operating under a different legal authority. For a deeper look at how this statutory menu developed historically, our coverage of the 1977 law and its limits traces how Congress built these authorities over decades — authority the Supreme Court has since curtailed, .
The law is moving toward requiring explicit congressional authorization for presidential tariffs — a real constraint. But Congress has authorized tariffs in multiple places, and the administration’s lawyers are skilled at identifying which statute fits which situation.
The deeper question is whether successive shifts between statutory authorities make up a coherent legal strategy or an attempt to get around the purpose of any individual statute’s limits. That question will require multiple court decisions over the next year to answer. If the administration lets Section 122 expire on July 24 and immediately issues a new proclamation on July 25, courts will have to decide whether that constitutes an end-run around the 150-day limit.
Section 122 does not explicitly prohibit successive proclamations. But a court could find that the statute contemplates a single 150-day tariff period, extendable only by Congress — a question that has never been litigated.
Importers who pay the Section 122 surcharge starting February 24 are not just paying a tariff. They are funding the next round of litigation, whether they bring it themselves or wait for someone else to. The 150-day clock is running. The procedural window for getting a court to stop collection before the tariff expires is narrow. The administration has shown a clear ability to shift between statutory authorities in hours, not weeks. That means any court victory needs to be strong enough to constrain not just this proclamation, but the next one too.
Whether that kind of lasting constraint is achievable through litigation alone, or whether it ultimately requires Congress to revisit the tariff authorities it handed presidents over the past sixty years, are questions Learning Resources opened but did not answer.
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