On May 8, the US Court of International Trade ruled that Donald Trump’s massive new Section 122 tariffs are illegal, in cases brought by the Liberty Justice Center (on behalf of two small businesses) and 24 state governments, led by Oregon. Today, the CIT rejected the Trump Administration’s motion to stay the injunction blocking further collection of the tariffs until the litigation over the case is done.
This is a potentially very significant ruling. Last year, in the case challenging Trump’s IEEPA tariffs, LJC and I secured an injunction against them from the CIT, but that injunction was then stayed until the Supreme Court finally decided the case, almost a year later. That led to the collection of some $166 billion of illegal tariffs, and caused all sorts of harm that cannot be compensated by refunds (which the Trump administration only recently finally began to pay). As I explained at the time the IEEPA stay motion was being litigated:
One factor courts consider in assessing a motion to stay is which side is likely to ultimately prevail on the merits….
Another key factor is which side is likely to suffer “irreparable harm” if they lose on the stay issue. We argue that our clients – and thousands of other businesses – will suffer great irreparable harm if a stay is imposed. They will lose sales due to higher prices, good will can be lost, relationships with suppliers and investors will be disrupted, and more. Those harms can’t be made up merely by refunding tariff payments months from now, after the appellate process concludes.
In today’s ruling, the CIT recognized the significance of these issues, noting that “[a] stay will compound the losses, such as ‘lost profits and damage to business relationships, investments, and innovation’ as a result of the Section 122 tariffs.”
The immediate effect of this ruling is limited. The administration is likely to appeal it to the US Court of Appeals to the Federal Circuit, and ultimately perhaps even the Supreme Court. Moreover, the CIT injunction in this case is limited to the state of Washington and the two businesses represented by LJC. For procedural reasons, the court decided these are the only plaintiffs who have standing to challenge the tariffs, because they are the only ones who presented sufficient evidence that they directly import goods subject to the tariffs. But, as noted in my post about the CIT ruling on the merits of the case, many of the other states involved in the litigation likely also import covered goods, and they should be able to move to get a broader injunction, quite possibly one that would apply nationwide.
The CIT seems to have learned from the mistaken decision to stay the injunction against the IEEPA tariffs. Hopefully, the Federal Circuit and (if the issue gets there) the Supreme Court will rule the same way.
