On May 12th, the U.S. Court of Appeals for the Federal Circuit issued a ruling temporarily pausing last week’s decision from the U.S. Court of International Trade (CIT), which had struck down the Trump Administration’s 10 percent global tariffs imposed under Section 122 of the Trade Act of 1974. As a result, the tariffs will remain in effect while the appeal moves forward.

As previously reported, on May 7th, the CIT ruled in a 2–1 decision that the Administration exceeded its authority under Section 122. The court found that the statutory requirement of a “fundamental international payments problem” was not satisfied by the Administration’s reliance on persistent trade deficits alone. The CIT emphasized that Section 122 was intended to address more acute balance-of-payments crises, not broad, ongoing trade imbalances.

The Section 122 tariffs had been implemented following the Supreme Court’s earlier decision invalidating the Administration’s prior tariff framework under the International Emergency Economic Powers Act (IEEPA). In response, the Administration turned to Section 122, which permits temporary tariffs of up to 15 percent for a period of 150 days under specific economic conditions.

While the CIT ruling initially invalidated the tariffs, the appeals court’s stay is procedural and does not reflect a final determination on the merits. Rather, it preserves the status quo while the case proceeds through the appellate process.

For the premium cigar industry, the outcome of this litigation remains particularly significant. Premium cigars are almost entirely imported, with the United States relying heavily on countries such as the Dominican Republic, Nicaragua, and Honduras for supply. Broad-based tariffs of this nature disproportionately impact U.S.-based manufacturers, distributors, and retailers—many of which are small, family-owned businesses with no viable domestic alternatives. If ultimately invalidated, the removal of these tariffs would alleviate cost pressures across the supply chain and help preserve pricing stability for both retailers and consumers.

In the near term, the case introduces continued uncertainty into the U.S. tariff framework and raises broader questions about the Administration’s post-IEEPA trade authorities and the scope of executive power in this area.

CRA will continue to monitor developments closely and provide updates as the appeal progresses.

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