WASHINGTON (AP) — In an escalating trade dispute, approximately 24 states have mounted a legal challenge against President Donald Trump’s newly announced global tariffs, following a Supreme Court ruling against his previous tariff strategy.
Democratic attorneys general and governors argue the President is overreaching by planning to implement 15% tariffs on imports from many countries, citing an abuse of power.
President Trump insists that these tariffs are crucial for addressing America’s persistent trade deficits, invoking Section 122 of the Trade Act of 1974 after a setback in the Supreme Court regarding tariffs enacted under emergency powers the previous year.
Section 122 empowers the President to impose tariffs up to 15%, with a limitation of five months unless Congress extends the duration. This provision has never been utilized before.
The legal action is spearheaded by attorneys general from states including Oregon, Arizona, California, and New York.
Oregon Attorney General Dan Rayfield stated, “The focus right now should be on paying people back, not doubling down on illegal tariffs.” This comment follows a judge’s decision mandating refunds for businesses affected by the earlier tariff framework.
White House Plans Robust Defense
The White House maintains that Trump’s actions are within his legal purview. “The President is using his authority granted by Congress to address fundamental international payments problems and to deal with our country’s large and serious balance-of-payments deficits,” commented spokesman Kush Desai. “The Administration will vigorously defend the President’s action in court.”
The lawsuit contends that Section 122 was not meant for widespread import taxes and will likely lead to increased costs for states, businesses, and consumers.
Arizona Attorney General Kris Mayes highlighted a New York Federal Reserve Bank study indicating that the tariffs could cost the average American household around $1,200 annually. “That is money out of the pockets of American families trying to buy groceries, pay rent and keep their small businesses afloat,” Mayes remarked.
The states involved previously succeeded in challenging tariffs under the International Emergency Economic Powers Act (IEEPA) imposed by Trump.
With the Supreme Court striking down IEEPA tariffs on February 20, Trump resorted to Section 122 four days later, initially setting a 10% tariff on foreign goods. Treasury Secretary Scott Bessent announced on CNBC that the administration plans to escalate these tariffs to the 15% threshold.
Critics, including Democratic states, argue that Section 122 cannot substitute the invalidated tariffs to address trade deficits.
Originally, Section 122 was created in response to financial crises when the U.S. dollar was pegged to gold, a situation no longer applicable, leading some to deem it outdated.
In a twist, Trump’s Justice Department had previously argued Section 122 was not applicable for addressing trade deficits, terming it “conceptually distinct” from balance-of-payment issues.
Legal experts suggest that this time, Trump’s position might be stronger legally. “The legal reality is that courts will likely provide President Trump substantially more deference regarding Section 122 than they did to his previous tariffs under IEEPA,’’ commented Peter Harrell, a visiting scholar at Georgetown University’s Institute of International Economic Law.
The Court of International Trade in New York, which will adjudicate the case, previously noted that Section 122 could be used to address trade deficits when striking down the emergency-powers tariffs.
Trump has other legal avenues for imposing tariffs, with some, like those on Chinese imports under Section 301 of the 1974 trade act, remaining intact after judicial scrutiny.
Joining the lawsuit are attorneys general from Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Rhode Island, Vermont, Virginia, Washington, Wisconsin, as well as the governors of Kentucky and Pennsylvania.
