The U.S. Court of Appeals for the Federal Circuit on Thursday granted The Trump administration’s request to stay a lower court’s preliminary injunction against its 10 percent global tariff, allowing the administration to continue collecting the tariffs from three importers that had received relief while the appeal process continues.
The per curiam regulation maintains a 10 percent surcharge that President Donald Trump implemented in February under Section 122 of the Trade Act of 1974, a balance of payments provision that no president has invoked since it took effect. The U.S. Court of International Trade ruled on May 7 that the surcharge exceeded the president’s legal authority and made it permanent, but only with respect to the three plaintiffs: Washington state, which imports through the University of Washington, and two private companies, spice importer Burlap and Barrel and toy maker Basic Fun.
Application of the four-factor test of Nken vs. HolderThe court found that three of the factors favored the government and that the fourth, public interest, was neutral. On the merits, the court said the government had adequately demonstrated that it was likely to succeed and expressed skepticism about the Commercial Court majority’s interpretation of the law. The commercial court had completed that a “balance of payments deficit” under Section 122 is limited to three technical measures: liquidity, official settlements and basic balance, an interpretation that the Court of Appeal questions based on legislative history. The court also concluded that the government would have suffered likely irreparable harm without a stay, relying on its argument that other importers would file subsequent lawsuits seeking the same relief if the injunction were to stand. The court noted that at least two such cases had already been filed. In addition, it was argued that refunds with interest would adequately mitigate any harm to plaintiffs if the tariffs were ultimately declared unlawful.
The order is not overriding and does not clarify the underlying remedy. The court made it clear that it was not setting out its own interpretation of section 122 and was not pre-empting the final decision of the expert panel:
Without prejudice to the final determination of these consolidated appeals by an expert panel, we conclude, based on the materials submitted, that a stay is justified in the circumstances. To reach this conclusion, we considered the traditional four residency factors: (1) whether the applicant has demonstrated a strong likelihood of success on the merits; (2) whether the plaintiff will be irreparably harmed by a stay; (3) whether the granting of the stay will materially prejudice the other parties to the proceeding; and (4) where the public interest lies.
Trump imposed the Section 122 surcharge on February 20, the same day the U.S. Supreme Court ruled on it Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act does not authorize the President to impose tariffs, thereby eliminating his previous reciprocal and country-specific obligations. The Section 122 measure went into effect on February 24 and is set to expire on July 24 unless Congress extends it. A coalition of 24 states filed a lawsuit challenging the award in March, and their case was merged with the importers’ appeal.
The stay will require the three plaintiffs, along with all other importers, to pay the surcharge while the Federal Circuit considers the appeal on the merits.
