Just weeks after the Supreme Court struck down IEEPA tariffs, a coalition of 24 state attorneys general filed suit in the U.S. Court of International Trade challenging the legality of the Section 122 tariffs that replaced them. The case, captioned State of California et al. v. United States, was filed on March 5, 2026.
The States’ Legal Theory
The states’ complaint alleges that the administration’s invocation of Section 122 is legally deficient on multiple grounds.
Procedural challenge. Section 122 requires the President to make a specific finding that a “large and serious” balance-of-payments deficit exists. The states argue that the administration’s written proclamation made no genuine balance-of-payments finding — it simply cited the IEEPA ruling as the triggering event for Section 122 tariffs, without the economic analysis that Section 122 requires.
Major questions doctrine. Despite Section 122 providing more explicit tariff authority than IEEPA, the states argue that the major questions doctrine still applies to the use of a 150-day tariff surcharge across the entire import economy. They argue that the statute was not designed for use as a multi-year import restriction program and that the administration is again seeking to use an obscure provision for massive, open-ended trade policy — exactly what the Supreme Court rejected in V.O.S. Selections.
Arbitrary and capricious. Under Administrative Procedure Act standards, agency actions must be reasoned and not arbitrary. The states argue that the administration’s immediate pivot from IEEPA to Section 122 — without any actual balance-of-payments analysis and without the procedural steps Section 122 contemplates — was arbitrary.
The CIT’s Role
The U.S. Court of International Trade has exclusive jurisdiction over challenges to tariff actions. The CIT is the same court that initially ruled against IEEPA tariffs before the Supreme Court’s confirmation. The CIT has a full bench experienced in trade law and has demonstrated willingness to scrutinize tariff actions closely.
An emergency injunction motion was filed alongside the complaint. A hearing on the injunction was scheduled for March 20, 2026.
What This Means for Importers
Section 122 refunds are not yet available. Even if the states ultimately prevail, Section 122 tariff duties paid since February 24, 2026 would only be refundable through a separate legal process. The CAPE portal covers only IEEPA duties and does not process Section 122 refund claims.
Monitor the litigation. If the CIT grants a preliminary injunction, Section 122 duties could be suspended pending the case outcome. Importers would stop paying the 10% surcharge but would not receive refunds of already-paid duties until the litigation concludes.
Continue CAPE filing. The Section 122 litigation does not affect your IEEPA refund rights. File your CAPE claim for the IEEPA period regardless of how the Section 122 case develops.
Plan for scenarios. If Section 122 tariffs are enjoined before the 150-day expiration around July 24, imports would face lower total duties immediately. If the tariffs expire normally, they end around July 24 regardless of litigation status. Importers should plan supply chain and pricing strategies around both scenarios.
We will update this story as the California case progresses through the CIT.