More than 20 states are suing to block the global 10% tariff President Donald Trump installed last month following a Supreme Court decision that invalidated previous levies.
In a lawsuit filed with the Court of International Trade on Thursday, the cohort of states, including New York, California and Minnesota, called on the court to invalidate the levies, arguing that Trump did not meet the statutory requirements to impose them. The suit also requests that refunds be issued to plaintiff states for entries that have incurred the tariff.
Last month, Trump invoked Section 122 of the Trade Act of 1974 to implement the 10% global surcharge on most imports to the U.S. shortly after the Supreme Court struck down wide-ranging levies he previously installed under the International Emergency Economic Powers Act.
Section 122 allows for a president to impose duties of up to 15% for a limit of 150 days to address balance of payment deficits. The statute, introduced during the Nixon administration, has never previously been used to enact tariffs, according to Thursday’s suit.
Beyond a lack of precedent, the suit argues that Trump has failed to meet the threshold to utilize the statute by falsely equating trade deficits with balance of payment deficits.
“Section 122 cannot be invoked merely to address trade deficits on their own, and the President does not have the discretion to use clearly erroneous propositions about terms of art to support his tariffs,” the lawsuit says.
The lawsuit also asserts that by exempting certain products from the 10% charge, such as goods compliant with the United States-Mexico-Canada Agreement, Trump is overstepping Section 122’s mandate for “broad and uniform application” of tariffs.
Furthermore, the states contend that Section 122 itself is no longer a relevant statute given its ties to a fixed-rate currency exchange system, which was replaced by a floating-rate methodology in 1976. The lawsuit also takes issue with Trump’s threat to raise the global tariff to 15%, something Treasury Secretary Scott Bessent said could happen “sometime this week.”
“As with his unlawful use of IEEPA, the President has once again exercised tariff authority that he does not have—involving a statute that does not authorize the tariffs he has imposed—to upend the constitutional order and bring chaos to the global economy,” the lawsuit says.
Although the lawsuit draws a line between the now-removed IEEPA tariffs and the Section 122 levies, that does not mean importers should expect the Court of International Trade to align with the states, according to Gregory Husisian, a partner at Foley & Lardner.
“While the better interpretation is probably that the law is being stretched beyond its purpose in these circumstances, the argument is a closer call than for the IEEPA tariffs, given that IEEPA does not even mention tariffs as a potential remedy,” Husisian said in an email to Supply Chain Dive.
This latest legal challenge to Trump’s tariff regime arrives as some clarity has begun to emerge about refunds related to IEEPA tariffs. On Wednesday, the Court of International Trade instructed Customs and Border Protection to liquidate unprocessed entries on U.S. imports and reliquidate those that have been processed but not finalized “without regard” to the now-defunct tariffs.
Antone Gonsalves contributed to this story.
