A federal trade court has halted a 10% import surcharge imposed by President Trump, ruling that the administration overstepped its legal authority. The court refused to pause the decision despite the government's appeal, finding no harm from blocking what it deemed an unlawful tax. 

RF Report

The US Court of International Trade (CIT) has refused to suspend enforcement of a judgment striking down President Trump’s 10% temporary import surcharge. In a decisive ruling issued 20 May 2026, the court found the surcharge overstepped presidential authority under Section 122 of the Trade Act of 1974, and rejected the administration’s request to stay the decision while an appeal proceeds.

Origins of the challenge

The dispute centres on Proclamation No. 11012, issued 2 February 2026, which imposed duties on imports globally. The State of Washington and two importers—Burlap and Barrel Inc. and Basic Fun Inc.—sued, arguing the measure exceeded statutory boundaries.

On 7 May 2026, the court sided with the challengers, declaring the surcharge invalid and ordering refunds of all collected duties with interest. The government appealed and asked the court to pause enforcement while the case proceeded through the appeals process.

Why the court rejected the stay

Under established legal standards, a court deciding whether to pause an injunction must weigh four factors: the likelihood of success on appeal, whether the government faces irreparable harm without a stay, injury to the other parties, and the public interest. The court found the administration failed on the critical measures.

The administration contended the ruling would damage presidential authority in foreign affairs. The court disagreed, stressing the injunction applied only to a narrow group—one state and two specific companies—and that customs officials retain the power to extend collection timelines for up to three years, protecting the government’s ability to collect if it ultimately prevails on appeal.

The court found more compelling harm on the other side: forcing the plaintiffs to continue paying duties the court had already ruled unlawful would cause real economic damage. The importers face lost profits, damaged business relationships, and investment losses.

The larger constitutional principle

The court rejected broad claims about national security and economic harm, emphasising that Congress—not the executive branch—holds constitutional power over taxes and duties. The judiciary must defend that boundary.

Notably, the Federal Circuit Court of Appeals had issued an interim hold on the injunction on 13 May 2026 while considering a longer stay. That court will now decide whether to maintain its temporary pause pending the full appeal, setting up the next stage of this significant trade law dispute.

Earlier, in May 2026, a US trade court ruled that President Donald Trump unlawfully invoked Section 122 of the Trade Act of 1974 to impose temporary 10% global tariffs. However, the decision only suspends the tariffs for three parties—Basic Fun!, Burlap & Barrel, and Washington State—while the duties remain in place for all other importers during the appeals process.