The legal battle over the administration’s Section 122 tariffs has escalated significantly since early May, adding another layer of uncertainty for manufacturers already navigating a rapidly shifting trade environment.
On May 7, the U.S. Court of International Trade ruled that the administration’s 10% global tariff imposed under Section 122 was unlawful. The court ruled the government failed to establish the balance-of-payments emergency required by statute to justify such extensive tariff action.
The Section 122 tariffs were enacted earlier this year after the Supreme Court invalidated the administration’s previous tariffs under the International Emergency Economic Powers Act. Section 122 was broadly seen as a temporary “bridge” authority to maintain tariffs while the administration pursued more lasting trade measures.
Just days later, on May 12, the U.S. Court of Appeals for the Federal Circuit issued an administrative stay temporarily pausing the lower court’s ruling while the appeal moves forward. As a result, the 10% tariff remains in effect for now, and Customs continues collecting duties.
For manufacturers, the immediate operational situation remains largely unchanged. The bigger issue is continued uncertainty. Companies are still being asked to make sourcing, pricing, and investment decisions while the legal foundation for key tariff actions continues to shift.
Importantly, Section 122 was always a temporary authority. Under the statute, tariffs cannot exceed 15% and generally may only remain in place for 150 days without additional congressional action. The current action is therefore expected to expire later this summer, absent another policy move.
At the same time, the administration continues advancing broader trade actions under Sections 232 and 301, including ongoing Section 301 investigations and the pending Section 232 investigation into robotics and industrial machinery. Taken together, these developments suggest the current debate is less about whether tariffs will continue and more about what legal and policy framework will replace the current system.
AMT will continue to closely monitor developments and engage policymakers to communicate the impact of tariff uncertainty on manufacturing technology companies and their customers.
