U.S. President Donald Trump's global 10% tariff, introduced to sidestep a ruling that the reciprocal tariff was unconstitutional, is expected to retain momentum through late July, its original expiration window. Although a trial court last month ruled the tariff invalid, the appellate court ordered the government to continue collecting the existing tariff until it issues its final decision.
On the 12th (local time), the U.S. Court of Appeals for the Federal Circuit decided to extend, until its ruling on the merits, the stay of the trial court's decision related to the global 10% tariff imposed by the Trump administration under Section 122 of the Trade Act. The court formally extended, after additional review, the temporary stay it issued immediately after the trial court's ruling on the 12th of last month.
The panel suggested there may be errors in the trial court's interpretation of laws related to the balance of payments deficit. It also determined that immediately halting tariff collection could cause irreparable financial harm to the federal government. As a result, the three plaintiffs—Washington state, toy importer Basic Fun, and spice importer Burlap & Barrel—who had received tariff exemptions after winning in the trial court on the 7th of last month, will have to pay the 10% tariff again until the case concludes. Earlier, while the trial court found the tariff unlawful, it limited the scope of relief to the parties who filed suit, rather than applying it universally to all corporations.
The legal battle began with Trump's hard-line trade pressure policy. After the Supreme Court in February struck down the reciprocal tariff based on the International Emergency Economic Powers Act (IEEPA), Trump immediately invoked Section 122 of the Trade Act to impose a 10% across-the-board tariff on all countries. He used an exception clause, which grants the president authority to impose tariffs for up to 150 days to address a large balance of payments deficit, as a kind of stopgap.
Under the rules, the global 10% tariff will automatically expire around late July. The Trump administration plans to wrap up its Section 301 investigation during this grace period and introduce a new punitive tariff to fill the gap left by the reciprocal tariff. In fact, the Office of the United States Trade Representative (USTR) on the 2nd signaled a 12.5% tariff on Korea on grounds of forced labor, further ratcheting up trade pressure on neighboring countries.
Business circles and economists warned that the appellate court's decision will, for the time being, further increase the tax burden on importers and consumers. Dan Anthony, executive director at the anti-tariff coalition We Pay the Tariff, told Reuters, "U.S. corporations paid as much as $8 billion in Section 122 tariffs in March alone, when the tariff fully took effect," adding, "The court should have completely blocked tariff collection during the appeal."
The Tax Foundation, a U.S. tax policy research organization, also analyzed that "even if the Section 122 tariff ends as scheduled after 150 days, the average effective U.S. tariff rate in 2026 is estimated at 5.7%, a record high since 1972." The foundation noted, "Although the government must refund $166 billion collected under the unconstitutional ruling, the actual applied rate will reach 11.7% while the tariff remains in place, leaving economic damage."