CAFC Stays the CIT Section 122 Ruling (May 12, 2026): What the Federal Circuit Pause Means for Every Importer

CAFC Stays the CIT Section 122 Ruling (May 12, 2026): What the Federal Circuit Pause Means for Every Importer

On Tuesday, May 12, 2026 — five days after the U.S. Court of International Trade struck down the Section 122 balance-of-payments surcharge as outside the President's statutory authority — a panel of the U.S. Court of Appeals for the Federal Circuit (CAFC) entered an administrative stay of the CIT's order and permanent injunction. The stay is short, mechanical, and procedurally narrow. It does not decide the merits of the appeal. It does not reverse the CIT's holding. It does not extinguish the refund rights of importers who file timely protests. What it does is freeze the CIT's order in place while the Federal Circuit considers the government's separate motion for a stay pending appeal.

For the named plaintiffs in the consolidated CIT case — Burlap & Barrel, Basic Fun!, and the State of Washington — the practical effect is that Customs and Border Protection can resume collecting Section 122 duties on their entries during the pendency of the stay, even though the CIT had permanently enjoined collection only five days earlier. For every other importer, nothing on the duty line of the entry summary changes: Section 122 collection has been continuous since February 24, 2026, was never enjoined as to non-plaintiffs by the CIT, and continues today exactly as before the May 7 ruling.

The stay matters because the Federal Circuit set a one-week briefing schedule on the government's stay-pending-appeal motion, with the plaintiffs' response due roughly May 19, 2026. That compressed schedule sends a signal that the panel intends to resolve the stay question within the next two to four weeks, and to do so before any liquidation-driven refund decisions force the government's hand at scale. The next data point is the panel's order on the stay-pending-appeal motion, which will tell importers whether the CIT injunction stays paused through final appellate decision or whether the original injunction snaps back into effect for the named plaintiffs.

This guide breaks down the operational meaning of the May 12 administrative stay for importers who are not parties to the CIT litigation: what the legal mechanics actually do, what changed on the duty line on Wednesday morning, what the Federal Circuit briefing calendar looks like, and the protest-filing and refund-preservation posture that makes economic sense regardless of how the panel rules. If you are filing entries today, the May 12 stay should not change your operational posture; it should reinforce it.

What the Administrative Stay Actually Did

The Federal Circuit's May 12 order is what trial lawyers call a "Forthwith" — a one-paragraph emergency order issued under the court's inherent authority to manage the appeal docket. The order does three specific things and explicitly declines to do anything else.

First, it stays the CIT's May 7, 2026 final judgment and permanent injunction with respect to all defendants and intervenors in the consolidated case pending the panel's resolution of the government's motion for a stay pending appeal. In practical terms, the injunction that barred CBP from collecting Section 122 duties from the three named plaintiffs is paused. CBP can — and, per its own internal guidance circulated to ports of entry on May 13 — does resume Section 122 collection on those plaintiffs' entries during the stay period.

Second, it sets a briefing schedule on the stay-pending-appeal motion: the plaintiffs' response brief is due seven days from the date of the order, and the government's reply (if any) is due three days after that. This is approximately three to five times faster than the standard CAFC motion calendar, which itself signals that the panel views the stay question as time-sensitive. Briefing closes on or about May 22, 2026.

Third, it explicitly declines to express any view on the merits of the appeal, the merits of the underlying CIT holding, or the broader question of whether Section 122 authorizes the February 24 proclamation. The administrative stay is procedural housekeeping — it preserves the status quo of Section 122 collection while the panel decides whether to grant the longer-running stay-pending-appeal motion.

The procedural distinction between an administrative stay and a stay pending appeal is important. An administrative stay is a short-fuse, status-quo-preservation order entered without merits analysis and typically lasting only until the court can resolve a longer motion. A stay pending appeal is a substantive merits-adjacent order that the moving party must support with showings of likelihood of success on appeal, irreparable harm absent a stay, balance of equities, and public interest. Granting an administrative stay is a low bar; granting a stay pending appeal is a higher bar that requires the court to look at least somewhat at the merits.

The May 12 order is the low-bar order. The high-bar order is still pending and is what the next two to four weeks of CAFC docket activity will resolve.

What Did Not Change on the Duty Line

For non-plaintiff importers — which is essentially every importer in the country other than three named entities — the May 12 administrative stay changed nothing about Section 122 collection. The CIT's May 7 injunction did not run against CBP collection on non-plaintiff entries in the first place, and the CAFC's May 12 stay did not modify that.

Specifically, on Wednesday, May 13, the following operational realities continued unchanged:

CBP continues to assess Section 122 at the current rate on every covered entry. The duty line on the entry summary still reflects the surcharge. ACE liquidation cycles continue to run on the standard 314-day clock. Entry summary filers continue to pay Section 122 duties at the time of entry, with the surcharge flowing through normal accelerated-deposit and reconciliation mechanics.

CBP has not issued a stand-down on Section 122 collection. There has been no CSMS notice paring back the surcharge, no administrative pause from the Treasury Secretary, no executive action modifying the underlying February 24 proclamation. The duty exists by operation of executive order; the executive order has not been modified or rescinded; collection continues by default.

The 180-day post-liquidation protest window under 19 USC §1514 remains live for every Section 122 entry. The May 7 CIT holding is now grounds for protest on the merits — the duty was unlawfully assessed because the underlying authority was invalid — and the May 12 administrative stay does not affect the validity of protest filings or the timing of the protest deadline. Importers who file protests during the appeal period preserve refund rights regardless of how the Federal Circuit ultimately rules.

The Post-Summary Correction (PSC) window under 19 CFR §149.4 remains live within 300 days of entry. PSCs filed on Section 122 lines are likely to be denied during the appeal period — CBP will not issue refunds while the appellate authority of the duty is unresolved — but a denied PSC creates a paper trail that supports later relief and resets the limitations clock for certain follow-on filings.

Section 232 and Section 301 duties continue at their full rates. The CIT decision did not touch the 50% Section 232 steel and aluminum duties, the 25% Section 301 China List 1–3 duties, the 7.5% List 4A duties, or any antidumping or countervailing duty determinations. Importers paying multiple tariff layers continue to pay each layer independently; the May 12 stay has no effect on any non-Section-122 layer.

For importers, the net effect of May 12 is that the Section 122 line on tomorrow's entry summary looks identical to the Section 122 line on the entry summary you filed last week. What changed is in the appellate calendar, not in your ACE filing posture.

The Federal Circuit Briefing Schedule

The CAFC's May 12 order establishes the briefing calendar for the stay-pending-appeal motion, and that calendar is the next operational milestone every importer should track.

Plaintiffs' response brief is due approximately May 19, 2026 (seven calendar days from the May 12 order). The plaintiffs — Burlap & Barrel, Basic Fun!, and the State of Washington — will argue that the government's stay request fails on the merits factors: that the government is unlikely to succeed on appeal because the CIT's statutory-construction analysis was correct, that the plaintiffs face concrete irreparable harm if Section 122 collection resumes during the appeal, and that the public interest favors maintaining the injunction. The plaintiffs will also argue that the administrative stay should be lifted ahead of any longer-running stay pending appeal because the equities favor the importers who have already obtained final judgment.

Government's reply, if filed, is due approximately three days after the plaintiffs' response — roughly May 22, 2026. The government's reply will likely focus on the public-fisc harm of refunding billions of dollars in Section 122 duties if the appeal is later reversed, the standing and severability questions left open by the CIT's narrow injunction analysis, and the appellate-deference principles that favor maintaining executive trade action during appeal.

The CAFC panel will then have the matter under submission and could rule on the stay-pending-appeal motion at any time after briefing closes. Historical CAFC trade-case timing suggests a ruling within two to four weeks after submission — meaning a decision on the stay pending appeal is likely between roughly June 5 and June 19, 2026.

Three outcomes are possible on the stay-pending-appeal motion:

The CAFC grants a stay pending appeal. The CIT injunction stays paused through the merits appeal. CBP continues to collect Section 122 from all importers including the three named plaintiffs. The named plaintiffs are essentially returned to the same operational posture as every other importer for the duration of the appeal. Refund eligibility for plaintiffs and non-plaintiffs hinges on the eventual merits decision.

The CAFC denies the stay pending appeal. The administrative stay lifts and the CIT injunction snaps back into effect for the three named plaintiffs. CBP must stop collecting Section 122 from them and process refunds for any Section 122 amounts collected after May 7. Non-plaintiffs continue to pay; the injunction still does not run to them. The appeal proceeds on a separate, slower merits track.

The CAFC issues a partial or modified stay. The panel could fashion intermediate relief, such as staying collection but requiring escrow accounts, staying refund obligations only, or limiting the stay to specific duty amounts. Such middle-ground orders are uncommon but possible in high-profile trade cases.

The merits appeal — the question of whether Section 122 authorized the February 24 proclamation in the first place — is on a separate, longer briefing track. Government's opening brief is typically due 40 days after notice of appeal, with appellees' brief due 30 days after that, and any reply due 14 days after that. Oral argument calendaring follows briefing closure, with a CAFC opinion typically issued three to nine months after argument. On the fastest realistic track, a merits opinion from the Federal Circuit is unlikely before late 2026. On a more typical track, a merits decision pushes into early 2027.

The July 24 Statutory Expiration

The single most important date on the Section 122 calendar is not the CAFC briefing schedule. It is July 24, 2026 — the statutory expiration of Section 122 authority under the 150-day cap built into 19 USC §2132.

Section 122 of the Trade Act of 1974 authorizes the President to impose temporary import surcharges to address balance-of-payments problems, but caps the duration of any such surcharge at 150 days unless extended by Congress through specific legislation. The February 24, 2026 proclamation triggered the 150-day clock, which expires by operation of statute on or about July 24, 2026.

Three scenarios are possible at the July 24 expiration:

The surcharge expires by operation of statute and is not extended. Section 122 collection ceases automatically on July 25, 2026 with no executive action required and no Congressional vote required. The administration could, in theory, attempt to invoke Section 122 again with a new proclamation citing new balance-of-payments findings, but a renewed Section 122 surcharge would face immediate constitutional and statutory challenges that mirror the current CIT litigation.

Congress extends Section 122 through specific legislation. This is the only mechanism for keeping the current surcharge in effect beyond July 24 under existing statutory authority. As of mid-May, no such legislation has been introduced, and the political math suggests an extension is unlikely to clear Congress before the statutory cliff.

The administration substitutes a different tariff authority. The most-discussed alternative is to consolidate the Section 122 base rate into expanded Section 232 actions, IEEPA invocations on specific country pairs, or new Section 301 retaliatory tariffs tied to specific trade enforcement findings. Each alternative faces its own legal challenges, but a switch to Section 232 would expand the affected product list and rates rather than preserving the current Section 122 universal 10% structure.

The July 24 expiration matters for the CAFC appeal because the appeal may go effectively moot for prospective collection if the surcharge expires by statutory operation before the Federal Circuit rules on the merits. The refund question for entries already paid remains live regardless — the limitations periods run from liquidation date, not from the date the surcharge expires — but the forward-looking duty-collection question disappears.

For importers, the July 24 cliff is the most important planning anchor in the entire Section 122 timeline. If the surcharge expires on schedule with no replacement, the duty line on the August 1 entry summary drops 10 percentage points across the board. If the administration replaces Section 122 with a Section 232 expansion, the duty line shifts but the cost may rise on specific product categories. Landed-cost models built today should include both scenarios.

The Refund Math Has Not Changed

For non-plaintiff importers, the refund preservation posture established after the May 7 CIT ruling is unchanged by the May 12 stay. The economics of protest filing remain overwhelmingly favorable, and the deadline structure runs from liquidation date independent of any CAFC procedural order.

Each Section 122 entry has a 180-day post-liquidation protest filing window under 19 USC §1514. For entries filed in February and March 2026, accelerated-disposition liquidation typically occurs in early-to-mid 2027, with protest deadlines running through mid-to-late 2027. For entries filed in April and May 2026, liquidation and protest deadlines push into late 2027 and early 2028. The protest window is long, but it is firm — once liquidation plus 180 days runs, the refund right is permanently barred regardless of the merits outcome at the Federal Circuit.

Protest filing costs at most brokers run $50 to $150 per entry. For high-volume importers, batch protest filing programs can reduce the per-entry cost to $40 to $75. At a $500-per-entry Section 122 duty threshold with a protest cost of $100, the entry returns positive expected value at any appellate-success probability above 20%. Given that the CIT ruled for the importers on the merits and the government's burden at CAFC is to reverse a careful statutory-construction holding, most trade attorneys are pricing appellate-success probability at 40% or higher even after the May 12 stay.

The break-even threshold by appellate-success scenario, assuming a $100 protest cost:

At 60% expected appellate success, the break-even Section 122 duty is $167 per entry. Above $167, protests carry positive expected value; below $167, the economics get tighter.

At 40% expected appellate success, the break-even is $250 per entry. Above $250, protests are positive EV; below, the math depends on volume and operational batching.

At 20% expected appellate success, the break-even is $500 per entry. Above $500, protests still pay off; below, the case for individual filing is weaker but discretionary batch filing remains rational.

The right protest-filing posture for most importers is to set a value threshold (commonly $200 to $500 per entry of Section 122 duty), file protests on every entry above the threshold, and run discretionary batch filings on entries in the $50 to $200 range when broker capacity allows. Calendar deadlines off the liquidation date and run a monthly compliance review to ensure no entries time out unprotested.

What Importers Should Do This Week

The May 12 administrative stay is not a reason to change operational posture, but it is a reason to confirm that the post-May-7 posture is actually implemented in your back office. Five actions are worth completing this week.

Confirm that your broker is filing protests on liquidated Section 122 entries on the rolling schedule you set up after May 7. Many importers built the protest plan in concept but have not yet seen the first batch of protests filed in ACE. The May 12 stay is a good prompt to ask your broker for the actual protest-filing log for the last two weeks and verify that the queue is moving.

Run a Section 122 entry inventory through ACE and segment by liquidation status. Entries already liquidated have an active 180-day protest clock and need calendared deadlines. Entries pending liquidation need a future-protest schedule built off the projected liquidation date. The inventory should be re-run monthly during the appeal period.

Update your landed-cost model with a Section 122 sensitivity flag. The model should support both a "Section 122 active" scenario and a "Section 122 expired" scenario, and you should be quoting customers off the active scenario while running the expired scenario as a planning view. The July 24 expiration is the most likely date the model flips to the expired scenario.

Document your refund-recovery counterparties. If your protests are denied and you proceed to a CIT case, you will need contemporaneous documentation of the original duty payment, the protest filing, the protest denial, and any communications with CBP. Build the documentation pipeline now while the volume is manageable; trying to assemble it retroactively after a CIT filing is expensive and error-prone.

Avoid betting your pricing strategy on either outcome of the CAFC stay-pending-appeal motion. The motion could go either way, and a wrong directional bet on May 22 will produce material pricing errors before the panel rules in early-to-mid June. Run your pricing decisions off the current duty rate and update only when an actual operational change in CBP collection occurs.

The Strategic Picture

The May 12 administrative stay does not change the strategic picture for most importers, but it does confirm what trade attorneys have been saying since May 8: the CIT's ruling, while substantively importer-favorable, is not a refund window. CBP will collect Section 122 duties through the Federal Circuit appeal period unless and until either (1) the Federal Circuit denies the stay pending appeal and the named-plaintiff injunction snaps back, (2) the administration administratively suspends collection, or (3) the July 24 statutory cliff arrives without an extension.

Importers who treat the CIT ruling as an immediate refund event are misreading the procedural posture. Importers who treat the May 12 stay as a sign that the appeal is doomed are misreading the merits picture. The right read is operational: file protests, calendar deadlines, document everything, run scenario models, and watch the appellate docket for the next material development.

The next material developments to watch are: the CAFC panel's order on the stay-pending-appeal motion (expected early-to-mid June), the government's opening merits brief at CAFC (expected July), the July 24 statutory expiration of Section 122, and any administrative action from Treasury or CBP modifying the collection regime. Each of these is a discrete point where the operational duty line could change. The May 12 stay is not one of them.

For now, the duty line on tomorrow's entry summary looks like the duty line on last week's entry summary. The refund pipeline preserved through timely protest filings still preserves refund rights. The CAFC stay is procedural housekeeping, not a merits decision. Keep filing protests; keep watching the docket; keep running both Section-122-active and Section-122-expired scenarios in your landed-cost model.

For context on the underlying May 7 CIT ruling, see our breakdown of the CIT's Section 122 decision. For the protest filing mechanics for non-plaintiff importers, see the 180-day deadline guide. For the full refund pipeline including CAPE Declaration mechanics on the related IEEPA refund flow, see the IEEPA Refund Guide.

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