25 States Sue Over 10–12.5% Section 301 Tariffs, Citing No Rational Basis

For legal professionals, this lawsuit represents a critical stress test of the Trade Act of 1974. The states’ complaint—that there is ‘no rational fit’ between combating forced labor and slapping blanket tariffs on 60 trading partners—raises fundamental questions about delegation, arbitrariness, and the limits of executive trade power. With the Supreme Court already having clipped the president’s IEEPA authority, this Section 301 challenge could further define the boundaries of unilateral tariff imposition.

On August 3, 2026, a coalition of 25 U.S. states – almost all led by Democratic governors or attorneys general – filed suit against the Trump administration in the U.S. Court of International Trade in New York, challenging the sweeping global tariffs imposed under Section 301 of the Trade Act of 1974. The tariffs, which took effect July 24, range from 10% to 12.5% and apply to 60 trading partners, covering 99% of all U.S. imports. The states argue the tariffs are a blatant overreach of executive authority, crafted under the guise of combating forced labor in international supply chains but in reality serving as a replacement for the earlier, judicially invalidated tariffs under the International Emergency Economic Powers Act (IEEPA). The lawsuit demands that the court block enforcement, declare the tariffs unlawful, and order refunds to importers who have already paid them.

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The tariffs, which took effect July 24, range from 10% to 12.5% and apply to 60 trading partners, covering 99% of all U.S.

The legal challenge is the latest chapter in an escalating trade war that has seen the Trump administration repeatedly pivot between legal justifications after a string of defeats. In February 2026, the U.S. Supreme Court struck down the president's broad IEEPA tariffs, ruling that the 1977 statute does not authorize unilateral import taxes. In response, the administration imposed temporary 10% global tariffs that expired at the stroke of July 24, and then immediately replaced them with the current Section 301 tariffs. The states now contend that there is "no rational fit between the purported problem of forced labor in international supply chains and the blanket global tariffs the USTR imposed," as they argued in the filing. This reflects a core legal tension: while Section 301 has historically survived court challenges—most notably in Trump's first term against China—the blanket, non-targeted nature of the current tariffs, combined with a flimsy forced-labor rationale, may test the statute's limits.

The White House has defended the move, with spokesperson Kush Desai stating that "Section 301 tariffs have proven to be a legally durable tool since the President's first term, and they remain so now." The administration maintains it is acting within its lawful authority to counter unreasonable trade practices. Yet the states, backed by previous victories, are betting that the judiciary will see through the pretext. Oregon Attorney General Dan Rayfield accused Trump of "inflicting more chaos on working families and homegrown Oregon businesses," while New York Attorney General Letitia James called the tariffs an attempt to "illegally raise taxes." Small businesses, which had previously sued to block the tariffs when they went into effect last month, have also seen some success in court, adding to the administration's legal woes.

The immediate economic impact is substantial. Importers are now paying higher duties on virtually everything entering the U.S., with costs likely flowing through to consumers and businesses. Supply chains that had only begun to recalibrate after the IEEPA debacle now face fresh uncertainty. If the courts ultimately rule against the administration, importers could be due billions in refunds, mirroring the IEEPA aftermath. Such a ruling would not only upend the government's fiscal assumptions but also further erode the credibility of the president's trade policy.