Several countries have filed a lawsuit against Trump’s new global tariffs after his loss in the Supreme Court

WASHINGTON (AP) — About two dozen states challenged President Donald Trump’s new global tariffs on Thursday, suing over his import taxes after a devastating loss at the Supreme Court.

Read more: FedEx joins other US companies seeking a full refund after Trump’s tariffs were deemed illegal

Democratic attorneys general and state governors say in the lawsuit that Trump is exceeding his authority by imposing planned 15% tariffs on much of the world.

Trump said the tariffs are necessary to reduce the long-term US trade deficit. He imposed duties under Section 122 of the Trade Act 1974 after the Supreme Court struck down customs duties he imposed last year under the Emergency Powers Act.

Article 122, which was never activated, allows the president to impose tariffs of up to 15%. Its duration is limited to five months unless extended by Congress.

The case is being led by attorneys general from Oregon, Arizona, California and New York.

“The focus now should be on giving back to people, not doubling down on illegal tariffs,” Oregon Attorney General Dan Rayfield said. The lawsuit comes a day after a judge ruled that companies that paid tariffs under Trump’s old framework should get refunds.

The White House pledges strong defense

The White House said Trump was acting within the limits of his authority. White House spokesman Khush Desai said, “The President is using his authority granted by Congress to address fundamental international payments problems and address our country’s large and serious balance of payments deficit.” “The administration will vigorously defend the president’s actions in court.”

The new lawsuit says Trump cannot focus on Section 122 because it was only meant to be used in specific, limited circumstances — not for blanket import taxes. It also claims that tariffs will lead to higher costs for countries, companies and consumers.

Arizona Attorney General Chris Mayes pointed to a study by the Federal Reserve Bank of New York that found Americans largely bear the cost of the tariffs, estimated at about $1,200 per year per household. “This is money out of the pockets of American families trying to buy groceries, pay rent and sustain their small businesses,” Mayes said.

Several plaintiff countries have also successfully sued over Trump’s tariffs imposed under a different law: the International Emergency Economic Powers Act (IEEPA).

Four days after the Supreme Court struck down his sweeping IEEPA tariffs on February 20, Trump invoked Section 122 to impose 10% tariffs on foreign goods. Treasury Secretary Scott Besent told CNBC on Wednesday that the administration would raise the duty to a 15% limit this week.

He watches: What’s next for consumers and the economy after the Supreme Court’s tariff ruling

Democratic states and other critics say the president cannot use Section 122 as an alternative to defunct tariffs to combat the trade deficit.

Article 122 targets what are called “basic international payments problems.” The issue now is whether this formulation covers the trade deficit, the gap between what the United States sells to other countries and what it buys from them.

Section 122 arose from the financial crises of the 1960s and 1970s when the US dollar was tied to gold. Other countries were disposing of dollars in exchange for gold at a specific price, threatening the collapse of the US currency and chaos in the financial markets. But the dollar is no longer tied to gold, so critics say Article 122 is outdated.

Embarrassingly for Trump, his Justice Department argued in a lawsuit last year that the president needed to invoke the Emergency Powers Act because Section 122 had “no clear application” in combating the trade deficit, which it called “conceptually distinct” from balance of payments issues.

However, some legal analysts say the Trump administration has a stronger case this time.

“The legal reality is that the courts are likely to give President Trump much greater deference with respect to Section 122 than they did with his previous definitions under IEEPA,” Peter Harrell, a visiting scholar at Georgetown University’s Institute for International Economic Law, wrote in a commentary on Wednesday.

The Specialized Court of International Trade in New York, which will hear the states’ lawsuit, wrote last year in its decision to strike down the emergency powers’ tariffs that Trump did not need them because Section 122 was available to combat the trade deficit.

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

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, and the governors of Kentucky and Pennsylvania.