The Brief

A coalition of twenty-four states has filed suit in the U.S. Court of International Trade to block the 10-to-15 percent global import duties President Trump imposed under Section 122 of the Trade Act of 1974 — a provision never previously invoked by any president — after the Supreme Court struck down his earlier tariffs under IEEPA. The states argue Section 122 was designed for balance-of-payments crises under fixed exchange rate systems, not trade deficits, and that the actual 2024 balance-of-payments figure amounted to roughly 0.2 percent of GDP.

The Report

Twenty-four states led by the attorneys general of Oregon, Arizona, California, and New York filed a complaint on March 5 in the Court of International Trade challenging President Trump’s replacement tariff regime, imposed hours after the Supreme Court’s 6-3 ruling in Learning Resources, Inc. v. Trump invalidated his earlier duties under the International Emergency Economic Powers Act. The coalition has since filed a motion for summary judgment or preliminary injunction, with oral arguments before a three-judge panel scheduled for April 10 in New York.

The complaint targets Trump’s invocation of Section 122 of the Trade Act of 1974, which permits temporary tariff surcharges of up to 15 percent for a maximum of 150 days when “fundamental international payments problems” exist. The provision was enacted during the transition away from the Bretton Woods fixed exchange rate system, when balance-of-payments crises could threaten a currency’s peg. No president has used it in the half-century since. The states contend the statute’s triggering conditions cannot be met under the floating exchange rate regime the United States adopted in 1973 — a system that, as Milton Friedman predicted in 1967, eliminated balance-of-payments crises by allowing currencies to adjust freely.

The administration’s stated rationale — addressing “large and serious balance-of-payments deficits” — conflates the goods trade deficit with the balance of payments, the states argue. When calculated to include the financial account surplus, the 2024 balance-of-payments figure represented approximately 0.2 percent of GDP. The complaint also alleges that exemptions for Canadian, Mexican, and Central American goods, along with 84 pages of product exceptions, violate Section 122’s requirement that tariffs be applied on a nondiscriminatory basis.

A parallel lawsuit filed March 9 by the Liberty Justice Center on behalf of two private importers — spice company Burlap and Barrel and toy manufacturer Basic Fun — raises nondelegation doctrine concerns, arguing the statute provides “no intelligible principle limiting the imposition of tariffs.”

The financial stakes are considerable. The federal government collected between $264 billion and $287 billion in customs duties in 2025, a 192 percent increase from the prior year. The Court of International Trade has already ordered Customs and Border Protection to begin refunding an estimated $175 billion in illegally collected IEEPA duties to more than 330,000 importers — a process the Cato Institute estimates will cost taxpayers approximately $700 million monthly in interest if delayed. State governments in the 24 plaintiff states face at least $748 million annually in additional costs from the Section 122 duties alone.

Georgetown legal scholar Peter Harrell has suggested courts may grant “substantially more deference” to Section 122 than they did to the IEEPA claims. Stanford’s Alan Sykes called the merits argument “silly” but questioned whether the court would rule before the tariffs’ July 24 expiration. The White House has said it will “vigorously defend” the president’s authority.

The tariffs expire in 131 days unless Congress extends them — an outcome widely considered unlikely.

The Angle

What is worth noticing is not the legal argument, which is straightforward, but the sequence. The Supreme Court ruled that IEEPA did not authorise tariffs. The administration responded not by accepting the constraint but by reaching for the next statute on the shelf — one written for a problem that ceased to exist in 1973, never used by any president, and now applied to conditions its authors could not have contemplated. When that statute is challenged, Section 301 investigations are already queued as the next instrument. The pattern is not a policy. It is a search algorithm: iterate through the U.S. Code until something holds.

The states’ complaint makes the technical case well — floating exchange rates, the 0.2 percent balance-of-payments figure, the discriminatory exemptions. But the more structural observation is about the relationship between the tool and the problem it is supposedly solving. Section 122 was designed for a specific monetary crisis under specific systemic conditions. Those conditions do not exist. The administration is not arguing that they do — it is arguing that the words are close enough. This is the legal equivalent of using a fire extinguisher as a hammer: the object is in your hand, the motion is similar, and the result is predictable.

The July 24 expiration date adds a dimension the legal briefs do not dwell on. If the tariffs survive judicial review, they still die in four months unless Congress extends them. If they do not survive, they join the IEEPA duties in the refund queue. Either way, the administration’s tariff authority narrows further, Section 301 investigations take months to complete, and the effective trade policy of the United States becomes whatever can be legally sustained between court rulings. Eighteen countries negotiated agreements based on IEEPA threats that no longer exist. The dollar is on 90 percent of global currency trades not because of tariff policy but because of institutional credibility — the kind that compounds slowly and dissipates faster than the people spending it tend to notice.