A US appeals court has suspended a lower court ruling that invalidated the Trump administration's 10% global tariff, allowing the levy to remain in place while the administration buys time until Section 301 tariffs under the Trade Act take effect in July.
According to Reuters on Thursday (local time), the US Court of Appeals for the Federal Circuit temporarily stayed the US Court of International Trade (CIT) ruling that had declared the 10% global tariff imposed under Section 122 of the Trade Act unlawful. On the 7th, the CIT invalidated the tariff, ruling that the balance of payments and trade deficit are fundamentally different concepts and that the Trump administration had conflated the two in justifying the global tariff. The balance of payments is an economic indicator covering all transactions between domestic residents and foreign counterparts, including goods, services, income, and finance. The trade deficit is generally measured based on goods transactions alone. The Trump administration appealed the first-instance ruling immediately on the 8th.
The global tariff was a card played by President Trump on February 24, right after the Federal Supreme Court ruled on February 20 that reciprocal tariffs and fentanyl tariffs based on the International Emergency Economic Powers Act (IEEPA) were unlawful. Section 122 of the Trade Act allows the president to temporarily impose tariffs or set import quotas to address balance-of-payments issues. Specifically, the grounds for imposing tariffs are "responding to large and serious US balance-of-payments deficits," "preventing an imminent and significant devaluation of the dollar in foreign exchange markets," and "cooperating with other countries to correct balance-of-payments imbalances." Tariffs based on Section 122 must not exceed 15% and can only remain in place for 150 days unless extended by Congress.
Because the 10% global tariff under Section 122 is valid only until July 24, the Trump administration will not have to suspend the tariff if the appeals court does not issue a ruling before then. Section 301 of the Trade Act grants the administration the authority to impose tariffs in response to unjustifiable, unreasonable, or discriminatory actions by foreign governments. Since March 11, the Office of the US Trade Representative (USTR) has been intensively investigating 16 economies — including China, the European Union (EU), South Korea, Japan, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Vietnam, Taiwan, Bangladesh, Mexico, and India — for any "unjustifiable, unreasonable, or discriminatory actions against the United States."
