US Appeals Court Allows Trump’s 10 Percent Global Tariffs to Continue During Appeal

The U.S. Court of Appeals for the Federal Circuit on June 11 temporarily extended a pause of a lower ruling that struck down President Donald Trump’s 10-percent global tariffs.

The appeals court granted the Trump administration’s motion to extend the stay of an injunction preventing collection of the tariffs in an unsigned order.

This means the federal government may continue collecting the tariffs under Section 122 of the Trade Act of 1974 for the time being as the current appeal plays out.

On May 7, the U.S. Court of International Trade struck down the global tariffs. The court ruled 2–1 in favor of small businesses and several states that contested the tariffs, which had taken effect on Feb. 24. The dissenting judge said it was premature to rule on the dispute.

The challengers had argued that the tariffs were the Trump administration’s attempt to sidestep a U.S. Supreme Court ruling that struck down the president’s tariffs levied under the International Emergency Economic Powers Act.

The trade court invalidated the temporary 10 percent value-based import duty that is layered atop existing tariffs on most goods entering the United States from all countries.

In his order imposing the tariffs, Trump relied on Section 122 of the Trade Act, which allows duties to be imposed for as many as 150 days to remedy serious “balance of payments deficits” or combat an imminent depreciation of the U.S. dollar.

The federal government had argued that there was a large balance-of-payments deficit in the form of a $1.2 trillion annual U.S. goods trade deficit, along with a current account deficit of 4 percent of the gross domestic product.

The majority on the trade court found that the president had gone beyond what the statute allowed. It determined that the tariffs were “invalid” and “unauthorized by law,” and issued a permanent injunction preventing the government from collecting the duties from Washington state and the two companies that sued over the policy.

The Trump administration appealed the trade court ruling, and on May 12, the Federal Circuit granted what is known as an administrative stay, without ruling on the merits of the appeal.

An administrative stay puts a lower court ruling on hold while the appeals court takes time to consider the case. The Federal Circuit said in its prior order that it was considering granting a longer stay. The Federal Circuit’s new order grants a formal stay while the appeal is pending.

“Without prejudicing the ultimate disposition of these consolidated appeals by a merits panel, we conclude based upon the papers submitted that a stay is warranted under the circumstances,” the court said.

The Federal Circuit found in its new ruling that the federal government would likely succeed on the merits in the appeal and that it may suffer irreparable harm if the stay were not granted.

It also held that those challenging the tariffs will not be substantially injured by a stay because they may still be given refunds with interest if the tariffs are ultimately declared unlawful.

On the question of whether a stay would be in the public interest, the court concluded “this factor is neutral,” noting that the parties did “not extensively brief” on the issue.

“Since the majority of the required factors favor the federal government, we grant the motions for stay pending appeal,” the Federal Circuit said.