Twelve U.S. states have filed a lawsuit against the Trump administration, accusing it of unlawfully imposing tariffs on goods entering the U.S. The tariffs were implemented under the International Emergency Economic Powers Act (IEEPA), a law that grants the president authority to act during times of national emergency.
The lawsuit claims that Trump used emergency powers to enact the tariffs, which the states say is illegal and unconstitutional.
States Challenge Presidential Authority Over Tariffs
A coordinated legal challenge led by Oregon and New York is now testing the limits of presidential power over U.S. trade policy. Filed in the U.S. Court of International Trade, the lawsuit names President Trump, the Department of Homeland Security, U.S. Customs and Border Protection, and their leaders as defendants.
At the center of the dispute are the Trump administration’s sweeping tariffs, which include 145% on most Chinese imports, 25% on goods from Canada and Mexico, and 10% on other imports, implemented through executive orders. The states argue that Trump’s actions unlawfully bypass Congress, citing the U.S. Constitution’s clear assignment of tariff authority to the legislative branch.
The legal challenge focuses on the administration’s use of the International Emergency Economic Powers Act (IEEPA) – a 1977 law designed to regulate commerce during national emergencies. Trump’s team invoked the act after declaring a national emergency tied to U.S. trade deficits, asserting that the hollowing out of American manufacturing posed an extraordinary threat.
Business groups and economic analysts are closely watching the case, given that U.S. business growth has already slumped to its weakest pace since late 2023, with uncertainty surrounding tariffs cited as a major drag on confidence.
Economic Fallout Ripples Through Supply Chains
For supply chain executives, the tariffs introduce a new layer of unpredictability that could destabilize procurement strategies, inventory management, and long-term planning. Small and medium-sized businesses, particularly those reliant on imported raw materials and goods, are reporting stockpiling tactics out of fear of future supply shocks.
Union leaders, like Oregon AFL-CIO’s Graham Trainor, also mentioned in a news conference held at the Oregon Department of Justice that the manufacturing and logistics jobs now hang in the balance as companies reassess hiring, investments, and sourcing strategies under volatile cost structures.
Meanwhile, financial markets have already begun to react. Wall Street is showing rare signs of synchronous stress across equities, bonds, and the dollar, with analysts citing the tariffs as a core driver of the instability. The IMF, too, has cut its global growth forecast, citing the looming threat of an entrenched trade war sparked by U.S. tariff policy.
Tariff Dispute Threatens to Undermine Business Growth
While the outcome of the lawsuit remains uncertain, it is clear that the uncertainty surrounding these trade measures has already begun to affect growth and investment, with companies forced to navigate an increasingly complex and unpredictable environment.
From higher costs to supply chain disruptions, the broader consequences could undermine the very manufacturing base these tariffs aim to protect. The outcome of this lawsuit, while important, is just one of many policy developments that will shape the future of U.S. trade and economic policy.
