The US Federal Circuit Court of Appeals in Washington has delivered a procedural victory to the Trump administration, allowing the government to continue collecting 10% global import tariffs while legal challenges wind through the court system. The ruling, issued June 12, 2026, overturned a lower court injunction and permits the White House to enforce levies scheduled to expire July 24, 2026 unless Congress votes to extend them.
The legal battle stretches back to February 2026, when the Supreme Court struck down Trump's original higher tariffs, prompting his administration to pursue this alternative approach.
Why This Matters for Portugal-Based Businesses
• Import costs remain elevated: Portuguese companies importing US goods—or buying from European suppliers who source American components—face continued price pressure through at least late July 2026.
• Legal uncertainty persists: The Federal Circuit's stay is temporary; final resolution may reach the Supreme Court, leaving businesses unable to forecast costs beyond the summer.
• Retaliatory cycle continues: EU countermeasures targeting US agricultural products, machinery, and consumer goods remain in effect, complicating Portugal's trade relationship with North America.
An Unprecedented Legal Weapon
President Trump invoked Section 122 of the Trade Act of 1974 after the Supreme Court struck down his original, higher-digit tariffs in February 2026. Section 122, dormant for more than 50 years, permits the president to impose worldwide import surcharges of up to 15% for 150 days to address what the statute vaguely calls "fundamental international payment problems."
The provision was drafted in the wake of President Nixon's 1971 emergency import surcharge, when the United States operated under fixed exchange rates and balance-of-payments crises posed existential threats to currency stability. Following the global shift to floating exchange rates in 1973, no administration saw fit to use Section 122—until now.
Trump's legal team argues that America's persistent trade deficits—the gap between what the US sells abroad and what it imports—constitute the kind of payment emergency Section 122 was designed to remedy. Critics, including trade law scholars and the businesses challenging the tariffs, counter that structural trade imbalances are not the acute financial shocks Congress had in mind and that the statute has been stretched beyond recognition.
The Lower Court Rebellion
In May 2026, a divided three-judge panel at the Court of International Trade in New York ruled 2-1 that the 10% levy was illegal. The majority opinion held that Trump exceeded the tariff authority Congress had delegated, writing that the surcharges were "invalid" and "unauthorized by law." Small importers—many operating on thin margins and unable to absorb sudden cost increases—brought the suits that led to the injunction.
The Federal Circuit's decision this week does not reverse that ruling on the merits. Instead, the appeals court found the government has "a likelihood of success" and granted a stay, meaning customs officers will continue to collect the duties while the case proceeds. Legal observers expect the dispute to climb to the Supreme Court, setting up a confrontation over executive power and trade authority that could reshape how future presidents wield economic statecraft.
What This Means for Portugal-Based Importers and Exporters
For Portugal-based enterprises engaged in transatlantic trade, the stay introduces a fresh layer of complexity. Companies importing machinery, electronics, or raw materials from the United States now face a minimum 10% cost premium through the end of July 2026, with no clarity on what comes next. Even firms purchasing domestically within Portugal may feel indirect effects if their Portuguese suppliers rely on American inputs or components.
The European Union has already retaliated with its own tariffs on US goods, reviving countermeasures from 2018 and 2020 and adding new levies on an estimated €28 billion worth of American exports. Portuguese producers of textiles, agricultural machinery, and processed foods that compete with US imports in third markets may find temporary advantages, though those gains risk evaporating if the tariff war escalates further.
Exporters face a different calculus. Portuguese wine, cork, ceramics, and footwear shipped to the US market currently avoid the Section 122 surcharge—the levy targets US imports from all countries, not Portuguese goods sold abroad. Yet Portugal's integration into EU supply chains means disruptions in Germany, France, or the Netherlands ripple south. If European manufacturers cut production because their own US sales have slumped, Portuguese suppliers of intermediate goods will feel the pinch.
The Clock Is Ticking: July 24, 2026 Deadline and Beyond
Section 122 imposes a hard 150-day limit. Trump proclaimed the tariff on February 20, 2026; it took effect February 24, 2026 and will lapse July 24, 2026 unless lawmakers vote to extend it. Congressional appetite for such a vote remains uncertain, with both Republican and Democratic factions divided over the economic and political wisdom of prolonged protectionism.
Behind the scenes, the US Trade Representative is preparing a longer-term alternative under Section 301 of the Trade Act of 1974, which addresses unfair trade practices such as forced labor. Public hearings on proposed Section 301 tariffs—ranging from 10% to 12.5%—are scheduled for July 7, 2026, with implementation targeted to coincide with Section 122's expiration. If enacted, those measures would shift the legal and policy foundation for tariffs but leave the economic reality largely unchanged: elevated import costs and continued retaliation from trading partners.
On June 1, 2026, Trump also adjusted Section 232 national-security tariffs on aluminum, steel, and copper, reducing some levies from 25% to 15% for agricultural and industrial equipment and introducing a new 10% rate for certain capital goods with high US-origin metal content. Those changes, effective June 8, 2026 and set to expire December 31, 2027, add another variable to the cost calculations of Portugal-based manufacturers and contractors sourcing heavy machinery.
Who Pays the Bill?
Economic research consistently shows that tariffs imposed by one country are borne primarily by importers and consumers in that country, not by foreign exporters. A 10% tariff typically reduces import volumes by roughly 4.3%, as buyers either absorb higher prices, pass them along, or switch to alternative suppliers. For Portuguese companies, this means American customers may balk at higher invoices, while Portuguese buyers of US goods face steeper bills.
The retaliatory spiral compounds the damage. China, Canada, Mexico, and the EU have all targeted politically sensitive American products—soybeans, bourbon, motorcycles, beef—aiming to maximize pressure on regions that supported Trump. Portugal's agricultural sector, while not a primary retaliatory target, operates within a European market where shifting trade flows can depress prices or tighten supply.
Impact on Expats and Investors
Portugal's expatriate community, particularly Americans living on pensions or investment income, may notice indirect effects. If tariffs drive up consumer prices in the United States, dollar-denominated income buys less when converted to euros for remittances or family support. Meanwhile, investors holding portfolios with exposure to US multinationals should brace for earnings volatility; companies dependent on global supply chains face margin compression and strategic uncertainty.
Real estate investors eyeing Portugal's property market could see transatlantic capital flows slow if US economic growth falters under the weight of trade friction. The International Monetary Fund and private forecasters have flagged tariff escalation as a downside risk to global GDP, with knock-on effects for small, open economies like Portugal's.
A Test of Presidential Power
The legal battle over Section 122 transcends trade policy; it is a constitutional contest over how much economic authority Congress has delegated to the White House and whether a president can revive dormant statutes to circumvent judicial setbacks. If the Supreme Court ultimately sides with Trump, future administrations—of any party—will possess a potent, fast-acting tool to reshape trade flows without legislative approval. If the Court rules against him, it will reinforce limits on executive power and force trade disputes back into the slower, more transparent processes Congress established.
For now, the Portugal Revenue Department and customs brokers at Portuguese ports must continue applying the 10% surcharge to eligible US imports, updating tariff codes and advising clients on exemptions. The list of excluded goods—certain critical minerals, energy products, pharmaceuticals, electronics, vehicles covered by the USMCA (US-Mexico-Canada Agreement), and textiles under CAFTA-DR—is detailed but subject to interpretation and periodic revision.
Navigating the Next Six Weeks
With the July 24, 2026 expiration looming and a Supreme Court decision potentially months away, Portugal-based businesses face a narrow window to adjust. Importers should lock in contracts now if possible, hedging against the risk that Congress extends Section 122 or that Section 301 tariffs prove even more onerous. Exporters to the US market should monitor exchange-rate shifts; a stronger euro relative to the dollar could offset some competitive advantages gained from American tariffs on third countries.
Professional advisers in Lisbon and Porto report heightened demand for trade-compliance audits and tariff-classification reviews, as even small missteps can trigger costly penalties or delays. Companies that have deferred supply-chain diversification may find this six-week interregnum the last chance to line up alternative sources before the legal landscape crystallizes—one way or the other.
