According to a report by Reuters on August 4, a coalition of 25 Democratic-held states filed a lawsuit in the U.S. International Trade Court in New York, accusing President Trump of exceeding his legal authority with the latest round of tariffs imposed on 60 trading partners. This is another significant legal action against the White House's trade policies, following a similar challenge by small businesses last month.
The new tariffs took effect on July 24th, imposing 10% and 12.5% taxes on goods exported to 60 trading partners, including the European Union. The reason for this is that these countries have not been effective in preventing the export of goods produced using "forced labor". These tariffs came into effect right after the previous 10% global tariffs expired.
The states where lawsuits have been filed include Oregon and New York, and these states are led by Democratic attorney general or governors. Dan Reidel, the attorney general of Oregon, said in a statement, "Despite losing the cases along the way, Trump still attempts to create further chaos for working families and local businesses in Oregon." The White House has not responded to requests for comment.
This lawsuit is the latest incident in which Trump's tariff policy has continued to face legal obstacles.
On February 20th of this year, the U.S. Supreme Court ruled that most of the tariffs imposed by Trump under the International Emergency Economic Powers Act (IEEPA) were invalid, stating that the act did not grant the President the authority to impose import duties unilaterally on trading partners. However, Trump not only did not stop his actions but instead escalated the trade war, accusing the Supreme Court justices of being “disloyal,” and then invoked another law that had never been used by any president to impose tariffs, issuing temporary 10% tariffs. These tariffs were later ruled to be illegal by the U.S. International Trade Court, but they remained in effect during the government’s appeals process.
The legal basis for this tariff change is Section 301 of the Trade Act of 1974 – a provision designed to combat unfair or discriminatory economic practices by other countries. This section has been used by successive U.S. presidents throughout history. However, states and small businesses have argued in their lawsuits that Section 301 tariffs have always targeted specific countries and industries, and there has never been a precedent where this section would apply to more than 99% of U.S. imports in a blanket manner.
Furthermore, the lawsuits filed by each province stressed that the new tariff is disguised as "compulsory labor" in order to repackage a previously rejected illegal taxation policy. They criticized that charging comprehensive taxes on imported goods offers no practical help in addressing the real issue of forced labor worldwide, and instead serves as a political maneuver to evade judicial rulings.
As this latest lawsuit progresses, the Trump administration's foreign policy, which focuses on tariffs, once again faces severe legal challenges. The disputes surrounding the boundaries of the president's trade authority are expected to continue to intensify.
