Two Dozen States Sue to Block Trump’s New 10% Global Tariff

A coalition of some two dozen states, led by Democratic attorneys general and including two Democratic governors, sued on Thursday to block the 10 percent global tariff President Trump imposed after the Supreme Court struck down his earlier tariffs. The Associated Press reported the complaint, filed in the Court of International Trade in New York, says Trump is exceeding his power under Section 122 of the Trade Act of 1974, a provision meant for “specific, limited circumstances” rather than sweeping import taxes.

Oregon, Arizona, California and New York lead the case, joined by attorneys general from Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Rhode Island, Vermont, Virginia, Washington and Wisconsin, plus the governors of Kentucky and Pennsylvania, the AP said.

Section 122 allows tariffs of up to 15 percent for up to 150 days to address balance-of-payments deficits and has never been used to impose tariffs, according to CFO Dive. The AP reported that the Supreme Court struck down Trump’s tariffs under the International Emergency Economic Powers Act on Feb. 20, and he then imposed the 10 percent global surcharge under Section 122. Treasury Secretary Scott Bessent has said it would rise to 15 percent “sometime this week,” CFO Dive reported, and the suit challenges that increase as well.

The states make several legal arguments, CFO Dive reported. They say trade deficits are not balance-of-payments deficits and that “Section 122 cannot be invoked merely to address trade deficits on their own.” They say exempting goods that comply with the U.S.-Mexico-Canada trade agreement conflicts with a requirement for “broad and uniform application.” And they argue the statute is tied to a fixed-rate currency system that ended with the move to floating rates in 1976. They ask the court to invalidate the tariffs and order refunds to plaintiff states for entries that paid them.

Arizona Attorney General Kris Mayes cited a New York Federal Reserve study to estimate the tariffs cost about $1,200 a year per household, which she said Americans largely bear, the AP reported. Oregon Attorney General Dan Rayfield said, “The focus right now should be on paying people back.” CFO Dive reported that on Wednesday the Court of International Trade instructed Customs and Border Protection to liquidate or reliquidate entries without regard to the now-defunct emergency-powers tariffs.

White House spokesman Kush Desai said the president is acting within his authority, adding, “The Administration will vigorously defend the President’s action in court,” the AP reported. The Justice Department had previously argued that Section 122 did “not have any obvious application” to trade deficits, according to the AP.

The outcome is not certain. Peter Harrell of Georgetown told the AP that courts will likely give Trump “substantially more deference regarding Section 122” than they did on the emergency-powers tariffs. Gregory Husisian of Foley & Lardner told CFO Dive the challenge is “a closer call than for the IEEPA tariffs” because that law does not mention tariffs as a remedy, and he cautioned importers not to assume the court will side with the states.