More than 20 states sue Donald Trump’s tariffs

(Washington) About twenty US states challenged new global tariffs imposed by President Donald Trump on Thursday, filing a lawsuit against the import taxes he imposed after a crushing defeat in the Supreme Court.

The Democratic attorneys general leading the lawsuit say Mr. Trump is exceeding his powers by imposing 15% tariffs on much of the globe.

Mr. Trump argued that these tariffs were essential to reducing the United States’ long-standing trade deficits. He imposed the duties under Section 122 of the Trade Act of 1974, after the Supreme Court struck down tariffs he imposed last year under an emergency powers law.

Section 122, which has never been invoked, allows the president to impose tariffs of up to 15 percent for a period of five months, unless extended by Congress.

The suit is being led by the attorneys general of Oregon, Arizona, California and New York.

The states argue that Section 122 was intended for use only in specific, limited circumstances and does not give Mr. Trump the authority to impose widespread import taxes. They also argue that tariffs will lead to increased costs for governments, businesses and consumers.

Many of these states also successfully sued the president’s tariffs under another law: theInternational Emergency Economic Powers Act (IEEPA).

Four days after the Supreme Court struck down IEEPA’s broad-based tariffs, on February 20, Mr. Trump invoked Section 122 to impose 10 percent tariffs on foreign goods.

Treasury Secretary Scott Bessent told CNBC on Wednesday that the administration will raise the tariff to 15% this week.

State Democrats and other opponents of the measure say the president cannot use Section 122 to replace waived tariffs to combat the trade deficit.

The provision in Article 122 targets what it calls “fundamental problems of international payments”. The question is whether this language covers trade deficits, that is, the gap between what the United States sells to other countries and what it buys from them.

Section 122 grew out of the financial crises that erupted in the 1960s and 1970s, when the U.S. dollar was tied to gold. Other countries were dumping their dollars in exchange for gold at a fixed rate, threatening to collapse the American currency and create chaos in financial markets. The dollar is no longer tied to gold, and opponents of the president’s measure say Section 122 is therefore obsolete.

Unfortunately for Mr. Trump, his own Justice Department argued in a court filing last year that the president should invoke the Emergency Powers Act because Section 122 “has no obvious application” in tackling trade deficits, which it called “conceptually distinct” from balance of payments issues.

Hope for Trump

Still, some legal analysts believe the Trump administration has a stronger case this time around.

“The legal reality is that courts will likely give President Trump far more deference regarding Section 122 than they did for his previous tariffs under IEEPA,” Peter Harrell, a visiting scholar at Georgetown University’s Institute for International Economic Law, wrote in a commentary Wednesday.

The Specialized Court of International Trade in New York, which will consider the states’ appeal, wrote last year in its own ruling striking down tariffs imposed under emergency powers that Mr. Trump did not need them because Section 122 could be used to combat trade deficits.

Companies that paid tariffs under that law scored a victory in court Wednesday, when a judge ruled that refunds were owed.

President Trump has other legal powers he can use to impose tariffs, and some have already survived legal tests. The tariffs he imposed on Chinese imports during his first term, under Section 301 of the same 1974 trade law, are still in place.

Also joining the lawsuit are the attorneys general of Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Rhode Island, Vermont, Virginia, Washington and Wisconsin, as well as the governors of Kentucky and Pennsylvania.