A week after the first IEEPA refunds disbursed, three more procurement-relevant clocks moved on top of the existing four. On May 7, the Court of International Trade struck down the Section 122 global 10% tariff; on May 12, the Federal Circuit stayed that ruling pending appeal. CBP’s CAPE throughput jumped from roughly 3% to roughly 8.3 million entries at the refund stage, with $35.46 billion in projected refund and interest now visible. Iran’s foreign minister rejected the U.S. peace proposal, and Brent rebounded from $101 to $109 over the May 12–15 window. And PJM filed its second compliance package on co-located data-center load by the May 18 deadline. Each event reshaped a specific input to landed cost, tariff exposure, or equipment-allocation queues on capital projects.
Federal Circuit Stays the Section 122 Ruling — Importers Keep Paying, but the Refund Inventory Expands
On May 7, the Court of International Trade issued a 2–1 ruling invalidating the 10% global Section 122 tariff imposed by Proclamation 11012, holding that the proclamation did not identify the “balance-of-payments deficits” that Section 122 of the Trade Act of 1974 requires. The Department of Justice filed a notice of appeal on May 8. On May 12, the Federal Circuit granted DOJ’s request for a temporary administrative stay, suspending the CIT’s permanent injunction while it considers the motion for stay pending appeal. The plaintiffs have until May 19 to respond.
For importers, nothing changes operationally: Section 122 duties continue to be collected on entries across the board. The CIT explicitly limited relief to the three named plaintiffs — Burlap & Barrel, Basic Fun, and the State of Washington — declining to grant a universal injunction. Non-plaintiff importers seeking refunds need affirmative litigation to preserve standing; protest filings with CBP will not capture relief if the Federal Circuit affirms.
| Section 122 Litigation Timeline | Detail |
|---|---|
| Proclamation 11012 effective date | February 2026 |
| CIT ruling (V.O.S. Selections et al.) | May 7, 2026 |
| DOJ notice of appeal | May 8, 2026 |
| Federal Circuit administrative stay | May 12, 2026 |
| Plaintiff response deadline | May 19, 2026 |
| Scope of permanent injunction | Three named plaintiffs only |
| Universal injunction | Denied by CIT |
Key takeaway: Section 122 is now the third concurrent tariff regime in active legal flux, after IEEPA (refunds running through CAPE since April 20) and the April 2 Section 232 metals restructuring covered in the May 4 brief. For capital project procurement teams, the operational implication is no longer about whether a single tariff line falls — it is the cumulative refund inventory that materializes if appellate courts affirm any of the three. Trade compliance teams should be cataloguing Section 122 payments alongside IEEPA and Section 232 ones, with entry-level detail (HTSUS code, importer of record, duty paid, liquidation status), so that filing readiness matches whatever windows open later this year. Vendor bids on long-cycle equipment that priced in a 10% Section 122 floor are now sitting against an uncertain refund pathway that did not exist three weeks ago.
CAPE Throughput Resets: $35.46B in Projected Refunds Now in the Pipeline
The CAPE Phase 1 throughput picture sharpened sharply this week. CBP reported that, as of May 11, 2026, 126,237 CAPE declarations have been submitted since the April 20 launch, with 86,874 passing file validations and 15,123,221 individual entries accepted for IEEPA duty removal. Of those, 8,338,081 entries have been liquidated or reliquidated without IEEPA duties, with an anticipated refund and interest amount of approximately $35.46 billion. CBP filed its progress report with the Court of International Trade on May 12, on the schedule set in the March 27 amended order.
Two operational facts reshape Phase 1 expectations. First, the share of accepted entries at the refund stage has moved from roughly 3% one week ago to roughly 55% of accepted entries this week — a step-change that signals CBP has cleared the bulk of the validated inventory faster than the published 60-to-90-day window suggested. Second, two new ACE reports are now available — ES-022 for CAPE claim status and ES-701 for reliquidation notices with refund and interest — giving brokers and trade compliance teams entry-level visibility into where each claim sits. Filings made in late April should now disburse on a tighter timeline than the mid-July floor projected last week.
Key takeaway: The economic significance of CAPE has moved from “promised refund channel” to “working refund channel with a measurable backlog.” Last week’s brief flagged the 3% disbursement ratio as Phase 1’s binding throughput constraint; that constraint has loosened materially in seven days. Treasury and trade compliance teams with active capital project entries should re-baseline Q2 and Q3 working-capital models against the $35.46B pipeline, not the $127B addressable population — those are two different numbers with several months between them. Procurement teams negotiating change orders or escalation clauses on imports that flowed through CAPE should also re-confirm with finance whether the refund crediting flows back to the project ledger or sits at the parent entity. That allocation determines whether project-level landed cost benefits from the recovery at all.
Iran Rejects the U.S. Proposal — Brent Rebounds 9% as the Binary Outcome Tilts
Last week’s brief framed the post-Project Freedom market as a binary deal-or-no-deal pricing problem, with Brent at $101 pending an Iran agreement. That binary resolved this week toward the no-deal side. President Trump rejected Iran’s counteroffer as “garbage” on May 7 and warned Tehran to “reach a deal or face ‘annihilation’” on May 14. Iran’s foreign minister Abbas Araqchi responded that Tehran has “no trust” in the United States, and the parties failed to converge on the one-page, 14-point memorandum of understanding that mediators in Pakistan had drafted.
Brent rebounded accordingly. The benchmark traded near $101 on May 8, opened May 12 at $110.43, pulled back toward $105 mid-week, then gained $3.35 (+3.17%) on May 15 to close at $109.07. WTI June futures settled at $102.18 the same day. The Hormuz strait remains effectively closed; roughly 23,000 seafarers across vessels from 87 countries remain stranded in the Persian Gulf. Goldman Sachs’s extended-closure forecast — Q3 Brent at $120, Q4 at $115 — is now the operational baseline rather than the bear-case scenario.
| Brent Crude — Post-Rejection Window | Close / Intraday |
|---|---|
| May 8 (Fri) — Project Freedom paused | ~$101 |
| May 12 (Tue) — talks falter | $110.43 (open) |
| May 14 (Thu) — Trump “annihilation” warning | ~$105 |
| May 15 (Fri) — rebuttal closes hearing window | $109.07 (+3.17%) |
| Goldman Q3 2026 (extended closure) | $120 |
| Goldman Q4 2026 (extended closure) | $115 |
Key takeaway: The energy-cost anchor under every petroleum-derived RFQ has shifted in the opposite direction from last week’s brief. Quotes priced against $101 Brent on May 8 are now structurally underwater; quotes priced against $109 on May 15 sit closer to the operational range Goldman has flagged as the durable closure floor. EPC, LNG, and manufacturing procurement teams with bids open on resins, coatings, insulation, plastics, petrochemical feedstocks, or freight-sensitive equipment should require an explicit Brent assumption on every quote — and a vendor-stated trigger price for escalation. Treat bids that don’t state their energy assumption as commercially indeterminate; the $20 round-trip pattern that defined April has now resolved into a binary outcome with $20 between the two prices.
PJM Files Co-Location Compliance by May 18 — Data Center Grid Queues Tighten Further
PJM Interconnection filed its second compliance package on May 18, responding to FERC’s April 16, 2026 order partially accepting and partially rejecting the operator’s prior co-location tariff submission. The proceeding traces back to FERC’s December 2025 determination that PJM’s existing tariff was unjust and unreasonable as applied to generators serving co-located data-center load. FERC accepted PJM’s interconnection-pathway revisions but rejected attempts to alter the Commission-mandated definition of “Co-Located Load” and to revise behind-the-meter application requirements.
The May 18 filing matters because it sequences against the FERC large-load interconnection docket (RM26-4-000) that FERC has committed to act on by end of June 2026. That docket would standardize how loads above 20 MW interconnect to the interstate transmission system, including the 100% participant-funding model that requires large customers to bear the full network-upgrade cost their projects trigger. Read together, the PJM compliance package and the RM26-4-000 final rule define the cost-allocation framework for data-center grid integration for the next several years — and that framework is what determines how transformer, switchgear, and high-voltage breaker allocation queues get sequenced under the DOE Section 303 grid-equipment determination covered three weeks ago.
Key takeaway: Last week’s brief flagged the 200-week-plus transformer lead time and 30% 2026 supply deficit as the binding constraint on AI data-center buildouts. The PJM filing and pending RM26-4-000 rulemaking add a second binding constraint on top of the physical-equipment one: cost-allocation. Hyperscale and colocation procurement teams should now treat transmission-upgrade cost responsibility as a distinct RFQ line item from equipment procurement — and require vendors of long-lead grid equipment to state explicitly whether their delivery commitments assume a 100% participant-funded interconnection or a socialized one. The two regimes price upgrades differently, and the difference flows through to award-time landed cost on transformer, switchgear, and HV breaker quotes that may sit in queue for two to four years.
What to Watch
- Federal Circuit Section 122 stay disposition (May 19 onward). Plaintiffs respond by May 19; the panel then decides whether to convert the temporary administrative stay into a stay pending appeal. A stay that holds keeps Section 122 collection in place through oral argument later this summer; a stay that dissolves opens the third refund channel within weeks. Either outcome resets the cumulative refund inventory on every active long-cycle equipment bid.
- CAPE disbursement velocity through Memorial Day. The 55% acceptance-to-refund-stage ratio sets a new throughput baseline. Watch for whether that ratio holds for the next four weeks of submissions or whether it was front-loaded with the cleanest filings. Sustained throughput at this rate would pull Phase 2 (finally liquidated entries) forward from “summer 2026 guidance” to a Q3 launch with disbursements before year-end.
- Iran negotiating posture and Hormuz traffic. With the U.S. proposal rejected and Trump’s “annihilation” warning standing, the next ten days carry binary risk. Watch the daily Hormuz commercial-vessel count — sustained moves above 25 daily transits would signal a deal track reopening; sustained zero would price in Goldman’s $115–$120 Q3-Q4 band as the durable basis on every petroleum-derived bid.
- FERC RM26-4-000 final rule (by end of June). With PJM’s May 18 compliance filing on the docket and FERC committed to action by end of June, the next six weeks will define large-load cost allocation for the rest of the decade. Capital project teams with active data-center, manufacturing, or LNG load interconnection requests should ensure their cost-of-service assumptions reflect the participant-funding model rather than the legacy socialized one.