TL;DR: On May 7, 2026, the U.S. Court of International Trade (CIT) ruled the 10% global Section 122 tariffs unlawful, finding that Proclamation 11012 did not identify the "balance-of-payments deficits" the statute requires. Per Greenberg Traurig's tariff alert, American small businesses paid roughly $8 billion in Section 122 duties in March 2026 alone, with NC manufacturers and construction firms taking an outsized share through hardware, components, and finished IT equipment imports. The decision does not automatically refund every small business, the administration is appealing, and per Skadden's analysis only the named plaintiffs get immediate relief - but every other affected NC SMB must act now to preserve refund and protest rights before they expire. This post is the practical NC small business playbook for the next 60 days.
Key takeaway: A favorable CIT ruling does not automatically refund anyone outside the plaintiff set. NC small businesses that paid Section 122 duties must file timely protests, document import entries, and preserve refund rights now - while simultaneously rebuilding their IT procurement strategy to absorb the appeal's likely 12-18 month uncertainty.
Need help connecting tariff strategy to IT budget planning? Preferred Data Corporation runs vCIO and IT strategy engagements for NC small businesses. Call (336) 886-3282 or request a tariff-aware IT budget review. Serving the Piedmont Triad, Charlotte, and Raleigh metros.
What did the U.S. Court of International Trade decide on May 7, 2026?
Per Holland & Knight's case summary and Gibson Dunn's analysis, the three-judge CIT panel held that:
| Element | The Court's holding |
|---|---|
| Statute at issue | Section 122 of the Trade Act of 1974 |
| What it authorizes | Temporary import surcharges tied to "balance-of-payments deficits" |
| Proclamation 11012 | A 10% global ad valorem tariff issued in late February 2026 |
| Defect identified | Proclamation did not identify the specific balance-of-payments deficits Section 122 requires |
| Result | Section 122 tariffs unlawful as applied; named plaintiffs entitled to refunds |
| Scope of relief | Per Morgan Lewis's analysis, the immediate refund relief is limited to the plaintiffs in this case |
| Appeal | Administration has appealed to the Federal Circuit; collections continue for non-plaintiffs |
The plaintiffs that won immediate relief - the State of Washington, Burlap and Barrel (a small spice importer), and Basic Fun! (a toy company) - get refunds. Every other small business that paid Section 122 duties is stuck in a procedural waiting room until they file protests or the appeal resolves.
How much did NC small businesses pay in Section 122 tariffs?
There is no official NC-specific Section 122 tariff total, but two anchors give the order of magnitude:
- Nationally, ~$8 billion in March 2026 alone per reporting on the Tariff Group's analysis
- NC accounts for roughly 2.8% of US imports, suggesting a state-level Section 122 bill in the range of $220-260 million per month during the surcharge window
For a typical NC small manufacturer importing $250,000/month in components and finished goods, the 10% Section 122 surcharge added approximately $25,000/month in direct tariff cost, which usually flowed through into IT line items (network equipment, laptops, servers, industrial sensors, controllers, monitors, UPS units, structured cabling) at higher run rates.
Who actually gets refunded - and who has to act fast to preserve rights?
Per Ward and Smith's NC-focused tariff alert and Snell & Wilmer's relief-scope analysis, three buckets emerge:
Bucket 1: Named plaintiffs
State of Washington, Burlap and Barrel, Basic Fun!. Refunds are processed directly without further action.
Bucket 2: Importers who filed timely protests
Section 122 entries are subject to standard CBP protest procedures. NC small businesses that filed protests within 180 days of liquidation of each affected entry preserved their refund rights and can claim refunds if the CIT ruling is upheld on appeal or extended via court order.
Bucket 3: Importers who paid but did not protest
This is where most NC small businesses sit today. Per Greenberg Traurig, these importers should:
- Identify every entry that included Section 122 duties (CBP Entry Summary 7501 with the relevant ad valorem line)
- Verify liquidation status for each entry
- File timely protests under 19 U.S.C. ยง 1514 within 180 days of liquidation
- Preserve documentation that ties duties paid to actual IT, manufacturing, or operational hardware acquired
Failure to file timely protests typically waives refund rights even if an appellate decision is favorable.
What is the practical 60-day NC small business action plan?
A 60-day plan that NC SMBs can execute alongside their normal operations:
| Day | Action | Owner |
|---|---|---|
| 1-7 | Pull every CBP Entry Summary 7501 for the Section 122 window (Feb 2026 onward) | Operations / customs broker |
| 7-14 | Flag entries with Section 122 ad valorem lines; total the duty amount | Finance |
| 14-21 | Consult with customs counsel or trade-focused CPA on protest strategy | Outside counsel |
| 21-35 | File protests on each unliquidated or recently liquidated entry | Customs broker / counsel |
| 35-45 | Recover technology purchase records that tie tariff cost to actual hardware acquired | IT / Finance |
| 45-60 | Refresh IT capital plan with tariff-recovery contingency scenarios (Y/N appellate reversal) | vCIO / IT partner |
The IT angle is critical: refunds, if received, are working capital that can be re-deployed into deferred technology investments (network refresh, endpoint replacement, EDR rollout, cloud migration). Without a refreshed IT plan, the refund risks being absorbed into general operations.
Schedule a tariff-aware IT budget review →
Why does Section 122 specifically matter for NC manufacturers and construction firms?
NC's economy is import-exposed in three categories where Section 122 had outsized impact:
- Furniture and home furnishings components - High Point, Hickory, and the broader Piedmont Triad furniture cluster imports significant hardware, fittings, and finishing materials
- Manufacturing capital equipment - precision machining, injection molding, and metalworking firms across the Piedmont Triad and Charlotte metros rely on imported tooling and replacement parts
- Industrial IT and OT hardware - PLCs, HMIs, sensors, ruggedized networking, and edge gateways used in plant-floor digital transformation
A 10% surcharge stacked on top of existing duties produced 15-25% landed-cost increases in many SKUs, which is the difference between proceeding with a planned digital transformation project and deferring it another fiscal year.
How should NC small businesses rebuild IT procurement strategy under appellate uncertainty?
Per the Skadden analysis on practical impact, the appeal could take 12-18 months. A defensible IT procurement strategy under that uncertainty has three components:
1. Inventory + dependency mapping
Identify which IT, OT, and capital equipment line items are import-exposed and which have domestic alternatives. Most NC SMBs find that 30-50% of planned IT spend has a domestic-alternative path that was not seriously evaluated before the tariff window.
2. Tiered procurement scenarios
Build three procurement scenarios: (a) tariffs reinstated on appeal, (b) tariffs vacated permanently, (c) status quo for 12 months. Pre-approve the procurement actions that fire under each scenario so the team is not negotiating with vendors during a tariff announcement.
3. Cash-flow hedge
If the business is sitting on materially recoverable Section 122 duties, treat that as soft working capital - available if refunded, deferred if not. Do not pre-spend the refund.
What is the CAPE refund portal and does it apply to my NC small business?
Per Fortune's reporting on the $166 billion refund window, the CAPE (Customs Automated Payment and Entry) refund portal was opened earlier in 2026 to process refunds tied to a separate Supreme Court ruling on IEEPA-based tariffs. The CAPE portal is distinct from the Section 122 process - it handles IEEPA-related refunds, while Section 122 refunds flow through CBP protest procedures. Many NC small businesses with broad import histories are eligible for both, but the documentation pathways are separate. A customs broker or trade-focused CPA can run a combined assessment.
How does this connect to the NSBA 2026 Trade Impact Survey?
Per the NSBA's 2026 Trade Impact Survey, 61% of US small businesses report tariffs have negatively impacted their operations and 42% cite rising tariff-driven costs as a primary financial concern. For NC SMBs, those national numbers are if anything understated, given the state's heavier exposure to furniture, textiles, and capital equipment imports. The Section 122 decision is the first major court-ordered relief signal since the surcharge regime started, and it should reshape both refund posture and procurement strategy.
How does Preferred Data Corporation help NC small businesses navigate this?
We do not provide legal or customs services, but we are the technology partner that makes refund recovery actionable. We help NC SMBs (a) reconstruct technology purchase histories that tie tariff-paid duties to specific IT, OT, and manufacturing-IT line items, (b) build the tiered IT procurement scenarios that absorb appellate uncertainty, (c) accelerate deferred digital transformation work when refund or hedge cash is freed up, and (d) coordinate with the customer's customs counsel, CPA, and finance leadership. We have served NC manufacturers and small businesses since 1987 and run vCIO and IT strategy engagements specifically designed for tariff-aware procurement.
Frequently Asked Questions
Does the May 7, 2026 CIT ruling automatically refund my Section 122 tariffs?
No. Per Snell & Wilmer's analysis, only the named plaintiffs (State of Washington, Burlap and Barrel, Basic Fun!) receive automatic refunds. Every other importer must file timely protests under standard CBP procedures to preserve refund rights.
How do I file a protest on a Section 122 tariff entry?
You file under 19 U.S.C. ยง 1514 within 180 days of liquidation of each affected entry. Most NC small businesses work through their customs broker or a trade-focused attorney. The protest cites the May 7, 2026 CIT decision as a basis for refund and preserves rights pending appellate resolution.
What if I am past the 180-day protest window for some entries?
Those entries may be lost for protest purposes, but consult with customs counsel - certain equitable remedies and litigation joinder strategies may still preserve some rights. Going forward, every Section 122-affected entry should be tracked and protested as it liquidates.
How much will the appeal take?
Per Skadden's practical analysis, the Federal Circuit appellate process typically runs 12-18 months. NC small businesses should plan IT procurement and capital strategy around that uncertainty window, not around an immediate refund.
Should I delay technology purchases while the appeal proceeds?
Generally no. The cybersecurity threat environment has not paused for the appellate court. The right posture is: continue critical IT investments (endpoint protection, EDR rollout, MFA migration, backup and recovery), defer optional refresh cycles where feasible, and identify domestic-alternative procurement paths for any import-exposed line items.
Will the appellate court likely reverse this decision?
Reasonable trade lawyers disagree. Per Ward and Smith's analysis, the underlying statutory analysis in the CIT decision is sound, but appellate courts have given the executive significant deference on trade policy in recent decades. Plan for either outcome.
How does this affect cloud and SaaS spending, which are not import-tariffed?
Indirectly. Cloud and SaaS vendors absorb hardware tariffs in their cost basis and pass them through in pricing. NC SMBs have seen cloud cost increases of 8-15% on multi-year renewals through 2026 as hyperscalers re-baseline pricing. If Section 122 is vacated, the next renewal cycle may give some pricing relief but it will lag the legal outcome.
Related Resources
- Tariff-driven technology investments for NC small business
- Tariff pressure IT cost survival guide NC
- vCIO services for NC manufacturers
- Technology vendor management for NC small business
- Managed IT services for North Carolina businesses
About the author: Preferred Data Corporation has provided managed IT, AI transformation, and cybersecurity services to North Carolina small businesses since 1987. Based at 1208 Eastchester Drive, Suite 131, High Point, NC 27265, we serve manufacturers, construction firms, and professional services organizations across the Piedmont Triad, Charlotte, and Raleigh metros. Call (336) 886-3282 or request a tariff-aware IT budget review.
Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or customs advice. Consult qualified customs counsel, trade attorneys, and CPAs for protest filings and refund strategy.