24 States Challenge Trump’s Section 122 Tariffs Following Supreme Court Defeat
Key Takeaways
- A coalition of 24 states has filed a lawsuit against the Trump administration, alleging that newly imposed 10-15% global tariffs under Section 122 of the Trade Act of 1974 are unconstitutional.
- This legal challenge follows a landmark Supreme Court ruling that invalidated previous tariffs levied under emergency powers, creating significant volatility for global supply chains.
Mentioned
Key Intelligence
Key Facts
- 124 states have joined the lawsuit alleging the Trump administration exceeded its constitutional authority.
- 2The administration is using Section 122 of the Trade Act of 1974, a provision never before invoked by a U.S. president.
- 3U.S. customs revenue surged to $287 billion in 2025, representing a 192% year-over-year increase.
- 4The Supreme Court previously ruled 6-3 in February 2026 that IEEPA-based tariffs were unlawful.
- 5Current tariffs are set at 10%, with the administration signaling a planned increase to 15%.
Analysis
The legal landscape for international trade has entered a period of unprecedented volatility as 24 U.S. states launched a coordinated legal strike against the Trump administration’s latest tariff regime. This lawsuit, filed in the wake of a stinging Supreme Court defeat for the executive branch, centers on the administration's pivot to Section 122 of the Trade Act of 1974. By invoking this obscure and previously unused provision to justify a 10% global levy—with plans to escalate to 15%—the administration is testing the limits of presidential authority over commerce. For supply chain managers and procurement officers, this represents a shift from predictable trade policy to a high-stakes 'whack-a-mole' legal environment where duty rates can be struck down and replaced within weeks.
The core of the states' argument rests on the separation of powers. Just last month, the Supreme Court ruled 6-3 that the administration overstepped its bounds by using the 1977 International Emergency Economic Powers Act (IEEPA) to impose duties. The states contend that the subsequent move to Section 122 is a transparent attempt to bypass that judicial check. Section 122 is specifically designed to address 'large and serious United States balance-of-payments deficits' through temporary surcharges. However, because the statute has never been invoked since its inception over fifty years ago, there is no judicial precedent defining what constitutes a sufficient deficit to trigger such powers. This legal vacuum creates a precarious environment for businesses that must now decide whether to bake these costs into their 2026 budgets or gamble on another executive defeat in court.
collected approximately $287 billion in customs duties, taxes, and fees—a massive 192% increase over the previous year.
From a data perspective, the fiscal impact of the administration's trade policy is already staggering. In 2025, the U.S. collected approximately $287 billion in customs duties, taxes, and fees—a massive 192% increase over the previous year. While the administration maintains that foreign exporters are absorbing these costs, logistics providers and domestic manufacturers report a different reality. The rapid escalation of duties has forced many companies to rethink their sourcing strategies, often leading to higher landed costs that are eventually passed to consumers. The states' lawsuit explicitly cites this 'chaos to the global economy' as a primary motivator, arguing that the unpredictability of the tariff regime is as damaging as the costs themselves.
What to Watch
Industry experts suggest that the U.S. Court of International Trade will likely be the first stop for this litigation, but the ultimate resolution will almost certainly return to the Supreme Court. The administration’s strategy appears to be one of maximum pressure, utilizing every available statutory lever to maintain a high-tariff environment regardless of specific judicial setbacks. This creates a 'permanent state of emergency' for procurement departments, which must now account for the possibility that any given tariff could be declared unlawful, only to be replaced by a similar levy under a different legal justification.
Looking forward, the outcome of this case will define the boundaries of executive trade power for the next generation. If the courts allow the use of Section 122 in this manner, it effectively grants the presidency a unilateral tool to reshape global trade flows without traditional congressional oversight. Conversely, a second defeat for the administration would severely limit the White House's ability to use trade as a tool of foreign policy. For now, supply chain leaders should prepare for continued price volatility and consider diversifying routes to mitigate the impact of what has become a protracted legal and economic war between the states and the federal government.
Timeline
Timeline
Record Revenue
U.S. customs collections hit $287 billion for the fiscal year.
Supreme Court Ruling
The Court strikes down tariffs imposed under the International Emergency Economic Powers Act (IEEPA).
Section 122 Invocation
Trump administration introduces 10% global tariffs using Section 122 of the Trade Act of 1974.
Multi-State Lawsuit
24 states file suit to block the new tariffs, citing separation of powers violations.