Trade court to rule on tariff stay by next week

By Brett Rowland
The Center Square

Two small businesses that won a ruling against President Donald Trump’s 10% tariff must continue paying it while courts decide whether to pause the decision during the appeal – a question that could be resolved as soon as next week.

The administrative stay imposed Tuesday by the United States Court of Appeals for the Federal Circuit remains in effect, meaning Burlap & Barrel and Basic Fun must continue paying the tariffs while the courts determine the next procedural step.

The United States Court of International Trade set a May 19 deadline for plaintiffs to respond to the administration’s request to stay the court’s own ruling after the Federal Circuit deferred the issue to the lower court Wednesday.

The tariffs remain in effect for all other importers regardless of how the stay dispute is resolved because the underlying ruling applied only to the three plaintiffs in the case.

American businesses have paid about $8 billion in Section 122 tariffs since the proclamation took effect in February, according to We Pay the Tariffs, a coalition of small businesses opposing the duties. The Yale Budget Lab estimated the tariffs would cost the average U.S. household between $600 and $800 annually.

Trump has faced a series of legal defeats in his effort to impose sweeping tariffs. The Supreme Court ruled 6-3 in February that his earlier tariffs under the International Emergency Economic Powers Act were unlawful, a decision that required the administration to refund about $166 billion in duties already collected.

Trump signed the Section 122 proclamation hours after the Supreme Court ruling, turning to a never-before-used provision of the Trade Act of 1974 to reimpose a 10% global tariff. That law has now also been struck down by the Court of International Trade, continuing a pattern of courts rejecting the president’s attempts to impose broad tariffs without explicit congressional authorization.

The Court of International Trade ruled 2-1 on May 7 that Trump’s proclamation was unlawful, finding the administration relied on the wrong economic benchmarks to justify the tariffs. Congress intended the 1974 statute to address specific balance-of-payments conditions, but Trump instead cited trade and current account deficits.

The administration appealed the ruling and asked both courts to pause the injunction pending appeal. The Federal Circuit temporarily froze the decision Tuesday but on Wednesday suspended consideration of its own stay request while directing the trade court to rule first.

The trade court responded within hours, accelerating its briefing schedule and confirming it would decide whether the injunction should remain in place during the appeal. Plaintiffs have until May 19 to respond.

If the trade court grants the stay, Burlap & Barrel and Basic Fun would continue paying the tariffs while the appeal proceeds. If it denies the request, the Federal Circuit could quickly reenter the dispute. The appeals court ordered the administration to immediately notify it of the lower court’s decision, signaling it is prepared to act swiftly.

Jeffrey Schwab, senior counsel at Liberty Justice Center, a nonprofit law firm that represents the two businesses, said Tuesday he would oppose the stay request.

“There’s no harm to the government from staying the injunction, because you’re talking about three plaintiffs,” Schwab said. “On the other hand, it is extremely burdensome on our clients to have to pay the tariffs.”

The administration argued in declarations filed in court Monday that suspending the tariffs would disrupt trade negotiations and trigger a surge in imports. U.S. Trade Representative Jamieson Greer warned in his declaration that if trading partners abandon negotiations, “these negotiations may never resume.”

Commerce Secretary Howard Lutnick similarly argued that lifting the tariffs during the appeal could cause immediate economic disruption that “cannot be repaired later.”

The administration is also moving ahead with a separate round of tariffs under Section 301 of the Trade Act of 1974. Trump acknowledged Saturday on Truth Social that the alternative tariff authority is “far slower and more laborious” than the approach courts have challenged.

Treasury Secretary Scott Bessent said in April the new tariff regime could take effect in July. The Section 122 tariffs are scheduled to expire July 24.