More than 20 states, led by Democratic attorneys general and governors from Oregon, Arizona, California, and New York, have filed a lawsuit challenging President Donald Trump's newly imposed global tariffs, which were enacted after the Supreme Court struck down his previous tariffs under the International Emergency Economic Powers Act (IEEPA) [1]. Trump imposed the new duties under Section 122 of the Trade Act of 1974, a provision that allows the president to impose tariffs of up to 15% for a period limited to five months unless extended by Congress. This section has never been invoked before [1]. Treasury Secretary Scott Bessant stated that the administration would raise the levies to the 15% limit this week, following an initial 10% tariff on foreign goods imposed four days after the Supreme Court decision on February 20 [1].
The lawsuit argues that Trump is overstepping his authority, as Section 122 was intended for specific, limited circumstances and not for sweeping import taxes. The plaintiffs contend that these tariffs will increase costs for states, businesses, and consumers. Arizona Attorney General Kris Mayes cited a New York Federal Reserve Bank study estimating that Americans bear the cost of tariffs, amounting to approximately $1,200 per household annually [1]. Oregon Attorney General Dan Rayfield emphasized that the focus should be on refunding companies who paid tariffs under the old framework, referencing a recent judge's ruling that such companies should receive refunds [1].
The White House maintains that Trump is acting within his power, with spokesman Kush Desai stating that the president is using authority granted by Congress to address fundamental international payments problems and the country's large balance-of-payments deficits. The administration has pledged to vigorously defend the president's actions in court [1].
Critics, including the Democratic states, argue that Section 122 cannot be used as a replacement for the defunct IEEPA tariffs to combat the trade deficit. The legal dispute centers on whether Section 122's language regarding "fundamental international payments problems" covers trade deficits [1].
CONCLUSION
The lawsuit by over 20 states against President Trump's new global tariffs signals significant legal and political opposition, with concerns about increased costs for American households and businesses. The White House stands firm on the legality and necessity of the tariffs to address trade deficits, setting the stage for a high-impact court battle. Market participants should expect continued uncertainty and potential volatility as the legal process unfolds.