States’ challenge to Trump tariffs faces federal court hearing Friday

Legal challenges to President Donald Trump’s latest tariffs head to a federal courtroom Friday in New York City. One lawsuit filed by a group of states and another filed by businesses target Trump tariffs tied to a 1974 federal trade law.

North Carolina Attorney General Jeff Jackson signed on last month to the multistate case led by Oregon. It opposes tariffs the Trump administration enacted under Section 122 of the 52-year-old Federal Trade Act.

“This is another case where the President invokes a statute to impose whatever tariffs he wants, its limits be damned,” lawyers representing the states wrote Tuesday. “Congress has provided authority in Section 122 under narrow circumstances, and the Defendants have plainly exceeded that authority.”

Chief Judge Mark Barnett and Judges Claire Kelly and Timothy Stanceu will hear arguments in the case Friday at the US Court of International Trade. Former President Barack Obama appointed Barnett and Kelly. Former President George W. Bush appointed Stanceu.

The Trump administration defended the tariffs in a court filing Friday.

“For over a century, Congress has supplemented the President’s constitutional power over foreign affairs and national security by delegating to him the authority to manage foreign trade in response to international conditions, including by imposing tariffs,” according the brief from US Justice Department lawyers.

Trump’s brief touted earlier tariffs struck down by the US Supreme Court. Those tariffs assessed under the International Emergency Economic Powers Act “leveled the playing field for American businesses and manufacturers, opened up markets abroad for American exports, and addressed the devastating trade deficit that has endangered America’s national security and economic prosperity,” Justice Department lawyers wrote.

Critics of IEEPA tariffs argued that they “would be justified under Section 122 of the Trade Act of 1974 if the tariffs did not exceed 15 percent and did not last more than 150 days. And courts — including this Court — relied on plaintiffs’ counsel’s arguments and agreed that Section 122 was the proper authority for imposing such tariffs,” according to the Trump administration brief.

“Now that the President has done what plaintiffs’ counsel repeatedly suggested and approved of in the IEEPA litigation, plaintiffs here, two private businesses and 24 states, nevertheless challenge the President’s exercise of authority explicitly delegated to him by Congress to deal with this type of economic imbalance,” the brief continued.

“[P]laintiffs abandon their prior litigation positions that the President can use Section 122 to impose tariffs under today’s circumstances and now remarkably claim that Congress enacted a law that was useless the day it was enacted,” Trump’s lawyers argued. “They also ask this Court to second guess the President’s determination, informed by expert advice from senior economic and trade advisors, that such a large, serious, and persistent balance-of-payments deficit exists and is significantly harming the United States’ national interests, including economic and national security interests. And they argue that the President exceeded his statutory authority by creating exceptions to the surcharge, even though Section 122(e) expressly authorizes the President to create product exceptions.”

Jackson cited John Locke Foundation research last month as he announced North Carolina’s participation in the suit filed by 22 state attorneys general and two Democratic governors. The complaint seeks a declaration that so-called “Section 122” tariffs are illegal. The states also seek refunds.

Trump imposed 10% tariffs in February based on Section 122 of the Trade Act of 1974. The tariffs could rise to 15%. Section 122 tariffs were designed to replace the IEEPA tariffs invalidated by the US Supreme Court on Feb. 20.

The new tariffs could cost North Carolina households $800 to $1,300 this year, according to an estimate from Jackson’s office.

“North Carolinians have already paid billions in unlawful tariffs — our farmers, our manufacturers, and our communities can’t bear more,” Jackson said in a news release. “I’m taking the federal government to court because they broke the law again, they harmed North Carolinians, and I can prove it.”

“These new 15 percent tariffs would apply to an estimated $1.2 trillion worth of annual imports nationally,” according to Jackson’s news release. “North Carolina’s agriculture industry could take an especially hard hit. The John Locke Foundation estimated that North Carolina’s farming industry and rural economy would lose about $1.9 billion and 8,000 jobs because of the IEEPA tariffs. The new tariffs threaten similar pain to our rural economy if other countries maintain retaliatory tariffs.”

The attorney general referenced “How Tariffs Threaten North Carolina Agriculture: NC Farmers At Risk,” a January Locke report authored by Jeffrey Dorfman, professor of agricultural and resource economics at North Carolina State University.

“Contrary to the purpose and limited delegation of Section 122, President Trump has invoked this statute to impose immense and ever-changing tariffs on whatever goods entering the United States he chooses and for whatever reasons he finds convenient,” according to the states’ lawsuit. “As with his unlawful use of IEEPA, the President has once again exercised tariff authority that he does not have — involving a statute that does not authorize the tariffs he has imposed — to upend the constitutional order and bring chaos to the global economy.”

“Section 122 exists to permit a limited tariff authority to address ‘fundamental international payments problems’ that require ‘special import measures to restrict imports’ to deal with ‘large and serious balance-of-payments deficits,’ among other things,” the suit continued. “Here, the President has invoked as justification a purported ‘balance-of-payments’ deficit.”

“The President’s purported justification is fatally flawed,” the states argued. “First, the President is contorting the term ‘balance of payments,’ redefining it contrary to its meaning and cherry-picking only the negative components that make up the balance of payments, while ignoring entirely the huge net positive financial inflow components that also make up the balance of payments.”

“Second, a balance of payments crisis is a currency crisis that was of great concern when Congress enacted Section 122, but which can no longer exist following the formal end of the fixed-rate currency exchange system in 1976,” the lawsuit added. “For these reasons, the President cannot meet the statutory requirements of Section 122, and his effort to impose tariffs under this statute is unlawful.”

Two North Carolina professors and one former state House Republican leader have signed on to a brief supporting states that challenge Trump’s tariffs.

Economics professors Edward Lopez of Western Carolina University and Michael Munger of Duke University, along with former NC House Speaker Pro Tem Paul “Skip” Stam, endorsed the amicus, or friend-of-the-court, brief.

The group Advancing American Freedom, founded by former Vice President Mike Pence, filed the brief. Other signers include the California-based Independent Institute, Virginia-based Center for Freedom and Prosperity, New Mexico-based Rio Grande Foundation, New York University Law School professor Richard Epstein, and academic economists from Illinois, Florida, South Carolina, and Utah.

Twenty-two state attorneys general and two Democratic governors filed suit on March 5 against the president’s “Section 122” tariffs.

“This case concerns the President’s invocation of the Trade Act of 1974’s Section 122, a section that was dead on arrival and, for that reason, has never been used,” according to the amicus brief. “In April 2025, President Trump’s ‘Liberation Day’ ushered in tariffs on countries around the world supposedly under the authority of the International Emergency Economic Powers Act (IEEPA). After nearly a year of expedited litigation, the President’s use of IEEPA as a tariff power was struck down by the Supreme Court, but not before the government imposed billions of dollars in tariffs on American importers.”

“Importers who paid IEEPA tariffs are now having to fight to get refunds as the administration says it must adjust its refund process to handle the volume of refunds due,” the brief continued. “And, even if it does ultimately repay all the importers it is legally required to reimburse, the Americans who paid higher prices, lost jobs, or missed out on economic opportunities because of the illegal tariffs will never be made whole.”

“Within hours of the Supreme Court’s decision striking down the President’s IEEPA tariffs, the President announced a new rash of duties supposedly under the authority of Section 122,” the brief explained. “While Section 122, unlike IEEPA, does at least purport to convey tariff authority upon the President in some circumstances, those circumstances have never existed since the formal termination of the Bretton Woods exchange rate system in 1976. Section 122 has thus never been used by any President.”

“The tariffs being collected even now are, again, illegal, and the importers who are paying them are being set up for ongoing hardship when they are inevitably entitled to a refund in the coming months,” the friend-of-the-court brief argued.

The brief reminded the Court of International Trade that it “correctly ruled quickly and issued a permanent injunction against the President’s collection of IEEPA tariffs” in 2025, but an appellate court stayed that ruling. “The Executive proceeded to collect IEEPA tariffs until February 2026 when they were struck down; the Executive Branch is now asking for time to issue refunds,” the brief explained.

“Because the Executive has demonstrated its reluctance or potential inability to expeditiously refund illegally collected tariff money and because many of the harms, both immediate and downstream, caused by illegal tariffs are irremediable, this Court should again quickly issue a permanent injunction against the President’s Section 122 tariffs and should deny any subsequent motion to stay that injunction,” the brief argued.

“States’ challenge to Trump tariffs faces federal court hearing Friday” was originally published on www.carolinajournal.com.