A coalition of U.S. states has launched a legal challenge against new tariffs imposed by Donald Trump, arguing the policy is unconstitutional and could force businesses to pay billions in unlawful trade duties.
The lawsuit, spearheaded by Letitia James, asks a federal court to invalidate the tariffs and order refunds to companies that have already paid them. State officials contend the administration is stretching federal law beyond its limits in order to impose sweeping import taxes without congressional approval.
The legal filing arrives just weeks after the Supreme Court of the United States ruled that Trump lacked authority to use the International Emergency Economic Powers Act to impose tariffs tied to economic emergencies. Following that decision, the administration turned to another statute—Section 122 of the Trade Act of 1974—to justify a new round of import duties.
In announcing the policy shift, Trump said the tariffs had “already been approved” and dismissed the idea that Congress must authorize them.
State attorneys general say that interpretation is legally flawed.
In a 35-page complaint, the states argue that “the power to tariff rests with” Congress and that the president “lacks inherent authority to impose tariffs.” The lawsuit claims the administration’s legal reasoning misinterprets the conditions under which Section 122 can be used.
Under that statute, temporary tariffs of up to 15% may be imposed in specific economic circumstances, but they are generally limited to five months unless lawmakers extend them.
According to the states, the law is meant to address “fundamental international payments problems” tied to large balance-of-payments deficits—not ordinary trade imbalances.
“[T]he Section 122 Proclamation focuses on trade deficits,” the lawsuit reads. “Contrary to the Section 122 Proclamation, a trade deficit is not a balance of payments deficit. Indeed, Section 122 expressly differentiates between ‘balance of payments’ and ‘balance of trade.'”
The filing argues that the administration is attempting to redefine economic terminology to justify its actions.
The complaint states that the president’s reasoning amounts to a “fatally flawed” attempt to reinterpret the concept of international financial accounting by ignoring key components of the balance-of-payments system.
“A balance of payments deficit is a term of art incorporating into law a settled meaning from international financial accounting—it includes the balance of trade as only one element, but it also includes the balance of capital and financial transactions. A trade deficit does not qualify, either as a matter of economics or of law, as a balance of payments deficit.”
The lawsuit also criticizes the administration for invoking laws that historically have not been used to impose tariffs.
“That statute had, unsurprisingly, never been used to attempt anything of the sort,” the lawsuit reads. “Having lost the battle on IEEPA, the President now dusts off a separate statute…which is another statute that has never been used to impose tariffs. Indeed, it has never been used at all.”
State officials further claim the tariff plan violates the statute’s requirement that duties be applied without discrimination. According to the complaint, the administration granted exceptions to several countries in North and South America, which the plaintiffs say contradicts the law’s nondiscriminatory mandate.
“Altogether, the President’s goal is clear—he wishes to exercise carte blanche authority when tariffing the world based on any statutory reed he can find,” the filing states.
Beyond statutory issues, the lawsuit raises constitutional concerns. The states argue that tariff authority belongs to Congress under the Constitution’s power to levy taxes and duties.
“Because the power to tariff rests with Congress, the President lacks inherent authority to impose tariffs, and the President has usurped Congress’s authority by imposing tariffs that violate Section 122,” the lawsuit goes on. “The Section 122 Proclamation is an exercise of Congressional authority in violation of separation of powers.”
In addition to blocking the tariffs, the states are asking the court to order financial restitution for businesses that have already paid duties under the policy.
The lawsuit concludes with a sweeping criticism of the administration’s trade strategy.
“Contrary to the purpose and limited delegation of Section 122, President Trump has invoked this statute to impose immense and ever-changing tariffs on whatever goods entering the United States he chooses and for whatever reasons he finds convenient. 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.”
In a public statement announcing the legal challenge, James said the tariffs risk increasing costs for consumers and businesses.
“Once again, President Trump is ignoring the law and the Constitution to effectively raise taxes on consumers and small businesses,” James said in a statement announcing the litigation. “After the Supreme Court rejected his first attempt to impose sweeping tariffs, the president is causing more economic chaos and expecting Americans to foot the bill. These tariffs will only drive up the cost of living, and I will continue to uphold the rule of law.”
If the court sides with the states, the decision could reshape the administration’s trade policy and potentially trigger significant refunds for companies affected by the tariffs.
Read More: Senate Democrats Block DHS Funding Bill Amid Iran Security Debate
Also Read: Trump Tariff Refunds Advance as Judge Orders Entry Closures
