A coalition of more than 20 U.S. states has filed suit to block the new 10% global tariff imposed by President Donald Trump, arguing that the administration has misused a little-tested legal provision to introduce broad new trade levies.
The lawsuit, filed with the Court of International Trade, includes states such as New York, California and Minnesota. It asks the court to invalidate the tariffs and issue refunds to the plaintiff states for imports that have already been subject to the surcharge.
The challenge centres on Section 122 of the Trade Act of 1974, which Trump invoked last month after the Supreme Court struck down an earlier set of tariffs imposed under IEEPA.
Section 122 permits a president to impose duties of up to 15% for a maximum of 150 days in order to address balance-of-payments deficits. According to the lawsuit, however, the provision has never before been used to introduce tariffs, and the administration has failed to meet the conditions required to activate it.
The states argue that Trump is wrongly equating trade deficits with balance-of-payments deficits, an interpretation they say is legally flawed. They also claim the administration is contradicting the statute’s requirement for broad and uniform application by exempting certain goods, including products compliant with the United States-Mexico-Canada Agreement.
The suit goes even further, suggesting Section 122 itself may no longer be relevant because it was designed in the era of fixed exchange rates, a system that was replaced in 1976.
It also takes issue with statements from Treasury Secretary Scott Bessent, who said the tariff could rise to 15% sometime this week.
The lawsuit argues that, just as with the administration’s earlier use of IEEPA, the president is once again exercising tariff authority he does not legally possess, creating instability in the global economy.
Legal observers note, however, that this case may be more finely balanced than the earlier IEEPA challenge. Unlike IEEPA, Section 122 does explicitly deal with tariffs, even if the present use may go beyond its intended purpose.
The case arrives as greater clarity is beginning to emerge around refunds tied to the now-removed IEEPA tariffs, though implementation remains a major operational challenge for CBP.
