Two dozen blue states sue over Trump’s new tariffs

Blue states sued President Trump on Thursday over his latest attempt to impose global tariffs, saying the new batch of levies misapplies a law designed to deal with arcane monetary issues.

The plaintiff states say Mr. Trump’s attempt to replace tariffs invalidated by the Supreme Court with a 10% global tariff under Section 122 did not meet Congress’ criteria.

Section 122 was designed to address economic conditions that occur when a country is on a fixed exchange rate, such as when the U.S. used the gold standard, rather than to resolve a trade deficit, according to California Attorney General Rob Bonta.

“Simply put, the law does not allow this, and we won’t stand by while it’s broken,” Mr. Bonta said at a Thursday press conference.

The new lawsuit is being led by Mr. Bonta, Arizona Attorney General Kris Mayes, Oregon Attorney General Dan Rayfield and New York Attorney General Letitia James.

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 joined the suit.

Democratic Govs. Andy Beshear of Kentucky and Josh Shapiro of Pennsylvania signed on as plaintiffs because their states have Republican attorneys general.

The White House disagreed with the blue states’ legal arguments.

“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. The administration will vigorously defend the president’s action in court,” said White House spokesman Kush Desai.

It is the second major effort by blue states to undo Mr. Trump’s tariffs, a key part of the White House trade agenda.

An earlier lawsuit from liberal states and small businesses ended in the Supreme Court striking down tariffs Mr. Trump imposed under the International Emergency Economic Powers Act. Mr. Trump decried the ruling but worked quickly to rebuild his tariff framework.

The administration is conducting investigations to impose longer-lasting tariffs under authorities that let the president address national security concerns or unfair trade practices by other nations.

In the meantime, Mr. Trump replaced his IEEPA tariffs with the Section 122 tariff. The tariff began at 10%, though Mr. Trump wants to raise the rate to 15%.

Section 122 tariffs last for 150 days before requiring congressional approval.

The start-and-stop nature of Mr. Trump’s tariffs has flummoxed U.S. businesses and caused turmoil on Wall Street. Stocks plummeted on Thursday, although the sell-off was caused by the unfolding conflict in the Middle East, which is driving up oil prices.

The Committee for a Responsible Federal Budget estimated Thursday that the 10% tariff would reap roughly $35 billion in revenue over the 150 days it’s allowed to be in effect. That number rises to around $50 billion if the tariff is set at 15%.

Yet the Trump administration is still grappling with the fiscal mess left by the invalidated IEEPA tariffs. Nearly 2,000 businesses filed legal claims seeking refunds for IEEPA tariffs after the Supreme Court’s ruling.

Judge Richard Eaton of the U.S. Court of International Trade on Wednesday said importers were entitled to refunds, which total somewhere between $130 billion and $175 billion.

Senate Democrats urged large businesses on Thursday to pass along a portion of forthcoming refunds to consumers who faced higher prices.

“American families paid higher prices for food, electronics, clothing, and household goods, while small businesses faced additional costs for raw materials, inputs, and equipment. They deserve to be made whole,” wrote Senate Minority Leader Charles E. Schumer, New York Democrat, and Sen. Ron Wyden, Oregon Democrat, to U.S. Chamber of Commerce CEO Suzanne Clark.

The administration has said that its systems were not set up for en masse refunds, so it may take time to process the repayments.

Business coalitions that fought the tariffs are hoping the government moves fast.

“The [trade] court acted swiftly and correctly,” said Dan Anthony, executive director of the We Pay the Tariffs coalition. “Now the ball is in the government’s court, and small businesses are concerned they will drag this out further.”