25 states sue Trump administration over Section 301 tariffs

Twenty-five states sued the Trump administration on August 3 to block tariffs imposed just three days earlier, arguing the White House bypassed legal requirements when it announced levies on 60 economies after a four-month investigation instead of the year typically required under Section 301 of the Trade Act.

The lawsuit, filed in the U.S. Court of International Trade, asks the court to declare the tariffs illegal. New York Attorney General Letitia James, who announced the suit, framed it as a direct challenge to presidential authority over trade policy.

What the states argue

The core complaint: speed. Section 301 investigations into single countries typically take up to a year. The Trump administration announced investigations into 59 countries and the European Union in March 2026 and enacted tariffs by July 31. That timeline, the states argue, made meaningful investigation impossible.

The lawsuit also challenges the administration's stated rationale. The tariffs were justified as a response to forced labor practices abroad. But the states contend there is no clear connection between the tariffs imposed and the goal of combating forced labor.

“No matter how the administration tries to justify it, the law and our Constitution are clear that the president does not have the power to impose sweeping tariffs on whatever countries he wants.”

— Letitia James, New York Attorney General

James referenced a prior Supreme Court loss for the administration, though the press release did not specify which case. The implication: this is round two of a legal strategy that has already found traction.

White House response

White House spokesperson Kush Desai rejected the states' claims, according to CNBC. He argued the tariffs fall within lawful authority.

“A foreign country's failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor is unreasonable and burdens U.S. commerce, including American workers, and must be addressed.”

— Kush Desai, White House spokesperson

The administration's legal position hinges on defining forced labor enforcement failures as an actionable burden on U.S. commerce. That interpretation stretches Section 301's traditional scope, which has historically targeted trade practices like intellectual property theft and market access barriers.

The tariff structure

President Trump's July 23 memorandum directed the U.S. Trade Representative to implement ad valorem tariffs at two levels: 10% on economies that had some forced labor import prohibitions in place, and 12.5% on those that did not. The USTR determined 60 economies qualified for action under Section 301.

The breadth is unusual. Previous Section 301 actions targeted individual countries, most notably China in 2018. Bundling 60 economies into a single investigation and tariff action is untested legal territory.

What happens next

The Court of International Trade handles trade-related disputes between the federal government and private parties or, in this case, states. Injunctive relief could pause the tariffs while the case proceeds, though such relief is not automatic.

For finance teams tracking supply chain costs, the litigation introduces uncertainty. The tariffs took effect July 31. If the court sides with the states, importers may seek refunds on duties already paid. If the administration prevails, the 10-12.5% levies become permanent cost factors for sourcing from the affected economies.

Source: PYMNTS | / PYMNTS