A coalition of 24 US states on Thursday filed a lawsuit challenging President Donald Trump’s implementation of new global tariffs following the Supreme Court’s February decision striking down his earlier tariffs under the International Emergency Economic Powers Act (IEEPA).

Thursday’s complaint, filed in the US Court of International Trade, argues that President Trump unlawfully applied Section 122 of the Trade Act of 1974 in his February 20 imposition of an ad valorem import duty on products imported into the United States. The case, Oregon et al. v. Trump et al., names the President, the Department of Homeland Security, and US Customs and Border Protection as defendants, and requests a three-judge panel under 28 U.S.C. § 255 given the constitutional scope of the issues raised.

The lawsuit’s core argument is that Section 122, which has never been invoked by any president, does not authorize the tariffs as currently applied. Section 122 permits tariff surcharges when “fundamental international payments problems” exist, which require “special import measures.” This provision allows for a 150-day tariff surcharge under three specific conditions: (1) “to deal with large and serious United States balance-of-payments deficits;” (2) “to prevent an imminent and significant depreciation of the dollar in foreign exchange markets;” (3) “to cooperate with other countries in correcting an international balance-of-payments disequilibrium.”

The states argue that President Trump failed to meet any of these thresholds, in large part because he conflated the US’s goods trade deficit with a balance-of-payments deficit, when a balance-of-payments deficit must properly account for all cross-border financial flows, not just trade of goods. The states argue that when properly calculated to include the US financial account surplus, the actual US balance-of-payments in 2024 represented a net-negative of only roughly 0.2% of Gross Domestic Product, which the complaint characterizes as “essentially a rounding error.”

Thursday’s complaint further argues that Section 122 is inapplicable in today’s economy, as it was created in 1974 in response to the Nixon Shock economic policies—meaning it was designed for a type of currency crisis that cannot occur under the current system, wherein a currency’s value is determined primarily through foreign exchange market supply and demand and without direct government intervention.

The lawsuit also alleges two statutory violations with respect to 122(d) and (e). The states contend that President Trump’s exemptions for goods from Canada, Mexico, and several other nations breach Section 122(d)’s nondiscrimination requirement, which notes that import restrictions “shall be applied consistently with the principle of nondiscriminatory treatment.” Under 122(e), import restrictions “shall be of broad and uniform application with respect to product coverage except where the President determines…that certain articles should not be subject to import restricting actions because of the needs of the United States economy.” The states argue that the president’s significant list of product exceptions was applied without support from factual findings. 

This is the latest legal development in an uncertain landscape surrounding the US tariff policy, following thousands of companies that are currently suing to recover previously paid tariffs.