Trump's 10% tariff paused by appeals court

Tariffs are back on — at least for now. On May 12, the U.S. Court of Appeals for the Federal Circuit put a temporary hold on a trade court ruling that had blocked President Donald Trump’s new 10% global import surcharge. So the administration can keep collecting that tariff while the appeals court decides whether to freeze the lower-court decision for longer. ### What changed on Tuesday? A week ago, the U.S. Court of International Trade said Trump’s new tariff was unlawful. Tuesday’s order did not reverse that ruling on the merits. It was an administrative stay — basically a short legal timeout while the appeals court considers the government’s request for a longer stay during the appeal. That matters because the tariff keeps operating in the meantime. (abcnews.com) ### What tariff are we talking about? This is not the older Trump tariff program the Supreme Court knocked down in February. After that loss, the White House switched to Section 122 of the Trade Act of 1974 and issued Proclamation 11012 on February 20, 2026, imposing a 10% surcharge on nearly all imports. Section 122 does let a president impose a temporary global surcharge, but only for a specific balance-of-payments problem and only for up to 150 days unless Congress extends it. (abcnews.com) ### Why did the trade court say no? The trade court’s point was narrow but important. Section 122 is tied to “large and serious” U.S. balance-of-payments deficits. Trump’s proclamation pointed instead to trade deficits, current-account deficits, and a negative net investment position. The judges said those are not the same thing under the statute Congress wrote in 1974. In plain English — the administration used a law aimed at one economic problem to attack a different one. (dorsey.com) ### Why didn’t the ruling kill the tariff nationwide? Because the court limited relief to the plaintiffs who had standing in that case. That meant Washington state and two importers — Basic Fun, the toy company behind Tonka and Care Bears, and spice seller Burlap & Barrel. The court ordered the government to stop charging those plaintiffs the tariff and to refund what they had paid, with interest. Everyone else was left outside that order. (dorsey.com) ### So who is paying and who is getting money back? That is the messy part. Importers are already receiving refunds on the older IEEPA tariffs the Supreme Court struck down in February. CNBC reported that Oshkosh Corporation and Basic Fun had begun getting payments on Tuesday, with Customs and Border Protection expecting $35.46 billion in refunds across 8.3 million shipments. But the new Section 122 tariff is still being collected while the appeals court stay is in place. (dorsey.com) So one set of Trump tariffs is being unwound while another almost-identical one is still alive. ### Are prices already showing tariff pressure? Broad inflation data is noisy, so you should be careful here. But April CPI did show several import-heavy categories moving up — apparel rose 0.6% for the month, and household furnishings and operations also increased, while headline CPI rose 0.6% and core CPI rose 0.4%. That does not prove this one tariff caused each jump, but it does fit the broader pattern that import costs are still leaking into consumer prices. (cnbc.com) ### What happens next? The appeals court still has to decide whether to grant a longer stay pending appeal. Then it will eventually rule on the legality of the tariff itself. Meanwhile, the 150-day clock on Section 122 keeps ticking, which means the administration either needs to win in court, get Congress involved, or replace this tariff with some other legal mechanism before the temporary authority runs out. That is the real stakes here — not just one court order, but whether Trump can keep rebuilding a global tariff wall after each legal defeat. (bls.gov) (abcnews.com)