By Dietrich Knauth
March 5 (Reuters) – A group of 24 U.S. states sued President Donald Trump’s administration on Thursday in the first legal challenge to his newly imposed 10% global tariffs, alleging that the president cannot sidestep a recent U.S. Supreme Court ruling that invalidated most of his previous tariffs on imported goods by citing new legal authority.
The Democratic-led states, including New York, California and Oregon, argue the new tariffs, which Trump announced immediately after the high court ruling on February 20, are also illegal. The tariffs were imposed for 150 days under the Trade Act of 1974, which is meant to address short-term monetary emergencies, not routine trade deficits that arise when a wealthy nation like the United States imports more than it exports, according to the states’ lawsuit filed in the New York-based U.S. Court of International Trade.
Oregon Attorney General Dan Rayfield said during a press conference that Trump’s latest tariffs are an attempted “end run” around working with Congress, as the U.S. Constitution requires.
“Make no mistake about it, President Trump’s signature economic policy is historically unpopular and is costing Americans, our business, and us as states hundreds of billions of dollars,” Rayfield said. “It cannot continue just because a few of Trump’s lawyers have found a way to twist words and craft a legal argument.”
White House spokesperson Kush Desai said in a statement that the administration will vigorously defend the president’s action in court.
“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,” Desai said.
Trump’s February 20 executive order imposed a 10% tariff on imports, but U.S. Treasury Secretary Scott Bessent said Wednesday that those rates would likely rise to 15% later this week.
CENTRAL PILLAR
Trump has made tariffs a central pillar of his foreign policy in his second term, claiming sweeping authority to issue tariffs without input from Congress. But the Supreme Court on February 20 handed Trump a stinging defeat when it struck down a huge swath of tariffs he had imposed under the International Emergency Economic Powers Act, ruling that the law did not give him the power he claimed.
Trump responded by criticizing the justices who ruled against him and announcing new duties under Section 122 of the Trade Act of 1974, a law that – like IEEPA – had never before been used to impose tariffs in the U.S. Trump has also imposed other tariffs, on imports like autos, steel and aluminum, under more traditional legal authority. Those tariffs are safer from legal challenges.
Section 122 authority allows the president to impose duties of up to 15% for up to 150 days on any and all countries to address “large and serious” balance of payments issues. It does not require investigations or impose other procedural limits. After 150 days, Congress would need to approve their extension.
The balance-of-payments deficit measures in the Trade Act are primarily meant to address “archaic” monetary risks that existed when foreign governments could trade in their dollars for gold held by the U.S., according to the states. Trump, however, has misapplied that standard in an attempt to instead address U.S. “trade deficits,” which occur when a nation imports more than it exports, according to the states.
The states that filed the lawsuit include 22 states with Democratic attorneys general and two, Pennsylvania and Kentucky, with Democratic governors and Republican attorneys general. They are asking the court to issue an order that would block the new tariffs and order any tariff payments already made under Section 122 authority to be refunded.
Meanwhile, the court is grappling with about 2,000 lawsuits from businesses seeking refunds for more than $130 billion in IEEPA tariff payments made by importers before the Supreme Court’s February ruling. On Wednesday, the court ordered U.S. Customs to begin processing tariff refunds.
(Reporting by Dietrich Knauth in New York, Nate Raymond in Boston, Jan Wolfe in Washington, D.C., Editing by Alexia Garamfalvi and Diane Craft)
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