What you need to know: California today filed a lawsuit challenging President Trump’s authority to unilaterally enact tariffs, which have created economic chaos, driven up prices, and harmed the state, families, and businesses.

SACRAMENTO – Governor Gavin Newsom and California Attorney General Rob Bonta today filed a lawsuit in federal court challenging President Trump’s use of emergency powers to enact broad-sweeping tariffs that hurt states, consumers, and businesses. The lawsuit argues that President Trump lacks the authority to unilaterally impose tariffs through the International Economic Emergency Powers Act, creating immediate and irreparable harm to California, the largest economy, manufacturing, and agriculture state in the nation. 

These tariffs have disrupted supply chains, inflated costs for the state and Californians, and inflicted billions in damages on California’s economy, the fifth largest in the world.

“President Trump’s unlawful tariffs are wreaking chaos on California families, businesses, and our economy - driving up prices and threatening jobs. We’re standing up for American families who can’t afford to let the chaos continue.” - Governor Gavin Newsom

“The President’s chaotic and haphazard implementation of tariffs is not only deeply troubling, it’s illegal. As the fifth largest economy in the world, California understands global trade policy is not just a game. Californians are bracing for fallout from the impact of the President’s choices - from farmers in the Central Valley, to small businesses in Sacramento, and worried families at the kitchen table - this game the President is playing has very real consequences for Californians across our state. I am proud to go to bat alongside Governor Newsom to fight for California’s vibrant economy, businesses, and residents.” - Attorney General Rob Bonta

The lawsuit, filed in the United States District Court for the Northern District of California, requests the court to declare the tariffs imposed by President Trump void and enjoin their implementation.  

The President lacks authority to enact unilateral tariffs

The lawsuit argues that President Trump lacks the authority to unilaterally impose tariffs against Mexico, China, and Canada or create an across-the-board 10% tariff. The President’s use of the International Economic Emergency Powers Act (IEEPA) to enact tariffs is unlawful and unprecedented.  

The IEEPA gives the President authority to take certain actions if he declares a national emergency in response to a foreign national security, foreign policy, or economic threat.  The law, which was enacted by Congress in 1977, specifies many different actions the President can take, but tariffs aren’t one of them. In fact, this is the first time a president has attempted to rely on this law to impose tariffs.  

Supreme Court precedent

The lawsuit invokes the U.S. Supreme Court’s major questions doctrine, which holds that in novel matters of vast economic and political significance, federal agencies and the executive branch must have clear and specific authorization from Congress. In recent years, the Court has applied this standard to strike down major initiatives, including President Obama’s Clean Power Plan and President Biden’s student loan forgiveness program, ruling that novel executive actions with broad impacts on the national economy cannot rest on vague statutory authority. 

It is difficult to imagine a more economically significant set of actions than the one Trump is taking on tariffs, which have inflicted hundreds of billions of dollars in economic losses on a whim, using a statute that doesn’t mention tariffs. The Court, applying this doctrine even-handedly, will find that such expansive action absent congressional approval is a clear violation of the law. 

California is the backbone of the nation’s economy 

California’s gross domestic product was $3.9 trillion in 2023, making it 50% bigger than the GDP of the nation’s next-largest state, Texas. The state drives national economic growth and also sends over $83 billion more to the federal government than it receives in federal funding. California is the leading agricultural producer in the country and is also the center for manufacturing output in the United States, with over 36,000 manufacturing firms employing over 1.1 million Californians. The Golden State’s manufacturing firms have created new industries and supplied the world with manufactured goods spanning aerospace, computers and electronics, and, most recently, zero-emission vehicles.

The Golden State is global leader in two-way trade

California engaged in nearly $675 billion in two-way trade in 2024, supporting millions of jobs throughout the state. California’s economy and workers rely heavily on this trade activity, particularly with Mexico, Canada, and China – our top 3 trade partners. Over 40% of California imports come from these countries, totaling $203 billion of the more than $491 billion in goods imported by California in 2024. These countries are also our top three export destinations, buying nearly $67 billion in California exports, which was over one-third of the state’s $183 billion in exported goods in 2024. 

Tariffs irreparably harm California businesses and consumers

As the largest economy in the nation, the largest agriculture state in the nation, and the largest U.S. trading partner, the harm of the tariffs on the state of California is immense. President Trump’s policies have already inflicted hundreds of billions of dollars in economic losses. 

Tariffs have an outsized impact on California businesses, including its more than 60,000 small business exporters. 

Standing up for California families and businesses 

Governor Newsom has responded quickly to help reduce negative impacts from the Trump tariffs on California’s economy and maintain California’s strong partnerships worldwide. Today’s lawsuit follows the Governor’s recent announcement of California’s goal to create new strategic trade relationships with international partners aimed at strengthening shared economic resilience and protecting California’s manufacturers, workers, farmers, businesses, and supply chains.  The Governor has also announced a new international campaign to help maintain the strong tourism partnership between California and Canada.

More opposition to President Trump’s tariffs

U.S. Senator Ted Cruz (R-Texas): “Listen, I love President Trump, I’m his strongest supporter, and I think he’s doing incredible things as president. But here’s one thing to understand, a tariff is a tax.”

U.S. Senator Rand Paul (R-Kentucky): “Every dollar collected in tariff revenue comes straight out of the pockets of American consumers.”

U.S. Senator Lisa Murkowski (R-Alaska): “And if the global implications of these tariffs have shown us nothing else, it’s that measures that are as important as these should be considered by the 535 elected individuals that are in tune with the American people, rather than vesting that with just one individual acting unilaterally.”

Ben Shapiro, political commentator: “The idea that this is inherently good and makes the American economy strong is wrongheaded; it is untrue…”

U.S. Chamber of Commerce: “What we have heard from business of all sizes, across all industries, from around the country is that these broad tariffs are a tax increase that will raise prices for American consumers and hurt the economy.”

National Retail Federation: “American consumers could lose between $46 billion and $78 billion in spending power each year if new tariffs on imports to the United States are implemented.”

The Wall Street Journal Editorial Board: “The dumbest trade war in history.”