California, Oregon and 22 other mostly Democratic states on Thursday sued the Trump administration over its new justification for the president’s wide-ranging tariffs.
California Attorney General Rob Bonta is co-leading the lawsuit with the attorneys general of Oregon, Arizona and New York. They say President Donald Trump’s use of Section 122 of the Trade Act of 1974 — which he invoked after the U.S. Supreme Court on Feb. 20 ruled that his use of the International Emergency Economic Powers Act was unconstitutional — is also illegal.
Trump immediately issued 10% tariffs across the board after the Supreme Court ruling that struck down most of the tariffs he imposed last year.
“He’s desperately grasping at straws,” Bonta said in a virtual press conference Friday. “The president’s rationale for these unlawful tariffs has gone from unreasonable to ridiculous.”
The group filed the lawsuit in the Court of International Trade. It says that Section 122 has never been invoked and can be used only under limited circumstances, such as to deal with “large and serious balance-of-payments deficits” and to prevent an “imminent and significant depreciation of the dollar,” and that the president’s justifications do not meet those requirements.
“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,” White House Spokesperson Kush Desai said in an email. “The Administration will vigorously defend the President’s action in court.”
New York Attorney General Letitia James, who was also at the press conference, said the president “conflates the balance-of-payment deficit with the trade deficit. They’re two distinct issues.”
The 35-page lawsuit explains that the balance of payments — the record of all transactions between U.S. and foreign residents that includes goods, services, income, assets and liabilities — consists of more than just the trade deficit.
In addition, Section 122 requires that tariffs be applied evenly across products, which the lawsuit says the administration is not doing because Trump’s tariffs proclamation includes exemptions of goods from Canada and other countries, and many product exceptions.
“On the merits, there’s a strong argument — an easy argument — that the situation contemplated by Section 122” doesn’t apply to the current U.S. economic picture, said Alan Sykes, a professor of law at Stanford University who teaches international trade and more. Because the U.S. has no need to intervene to prop up a failing dollar, “the notion that this current situation fits the logic of Section 122 is silly.”
But Sykes said that tariffs imposed under Section 122 have a 150-day limit, and that it’s unclear if the court will rule before then. And he also wondered whether the court will be willing to “tell the president that there’s no balance-of-payments deficit.”
The attorneys general also mentioned that Trump’s tariffs have raised prices for U.S. consumers and businesses. A recent Yale Lab study estimated that tariffs have cost the average household about $1,000 a year.
“President Trump ran on the promise of making life more affordable for families, yet here he is breaking the law to make life more expensive for Americans,” Bonta said.
In California, tariffs have disrupted businesses and industries including agriculture and wine, whose exports have fallen, according to a Public Policy Institute of California analysis.
The other states that brought the lawsuit are Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Rhode Island, Vermont, Virginia, Washington, Wisconsin, and the governors of Kentucky and Pennsylvania.
On Wednesday, a judge for the Court of International Trade ruled that companies that paid broad tariffs under the previous law cited by Trump are due refunds.The United States collected more than $264 billion in tariffs in 2025, according to the Tax Foundation. More than $130 billion of the tariffs collected were under the law the Supreme Court ruled the president did not have the authority to use.
The plaintiffs in this new lawsuit are also seeking refunds of any tariffs already collected under Section 122.