The ruling means the tariffs will remain in effect for now, affecting importers and businesses that had sought to block them. The case is expected to continue through the federal court system and could ultimately reach the Supreme Court.
The dispute centres on tariffs introduced by President Donald Trump underSection 122 of the Trade Act of 1974 after the Supreme Court struck down broader tariffs that had been imposed earlier. According to the Associated Press, the 10% worldwide tariffs were introduced in February and are scheduled to expire on 24 July unless further action is taken.
The legal challenge was brought by a coalition of more than 20 states led by Oregon, alongside several small businesses, including Burlap & Barrel and Basic Fun. They argue that the administration exceeded the authority granted by Congress when imposing the tariffs.
Appeals Court Questions Lower Court’s Interpretation of Trade Law
On Thursday, the U.S. Court of Appeals for the Federal Circuit stayed a previous ruling that had blocked the tariffs, allowing the government to continue collecting them while the case is heard in full.
The appeals court concluded that the federal government had made a sufficient showing that it was likely to succeed on the merits of its case. The court also found that the administration could suffer irreparable harm if the tariffs remained blocked, including disruption to U.S. trade policy.
The disagreement stems from the administration’s use of Section 122 of the Trade Act of 1974. That provision allows a president to impose temporary tariffs of up to 15% for a period of 150 days in response to serious balance-of-payments problems.
Last month, a split three-judge panel of the Court of International Trade ruled that the tariffs were unlawful. According to theAssociated Press, the majority found that the president had overstepped the authority delegated by Congress and described the tariffs as “invalid” and “unauthorized by law”.
The appeals court, however, suggested that the lower court’s interpretation of the statute may have been too narrow. Its opinion indicated that Congress may have intentionally left key terms flexible in order to provide discretion in assessing economic conditions.
Businesses Face Continued Costs While Case Remains Unresolved
For businesses importing goods into the United States, the ruling means the tariffs will remain in force during the appeals process. Importers, retailers and manufacturers may continue to face additional costs on products covered by the measure.
The court acknowledged that companies could experience financial and operational difficulties, including lost profits and constraints on growth, while the tariffs remain in place. The court noted that such losses could potentially be addressed through refunds if the challengers ultimately prevail.
The broader legal question remains unresolved. Section 122 has rarely been used and, according to the Associated Press, had never previously been invoked to justify import tariffs before this case. The provision also requires congressional approval if tariffs are to continue beyond the initial 150-day period.
For now, the appeals court’s order leaves the tariffs in effect while litigation continues. The judges emphasised that granting the stay does not determine the final outcome of the case, leaving the legality of the policy to be decided in future proceedings.
