New York Leads 24-State Lawsuit Targeting Trump’s Tariffs, With $13.5 Billion at Stake

New York’s legal gambit against the Trump administration’s latest tariffs spotlights a broader clash over the limits of presidential economic power—and who pays when they are exceeded.

For New York’s importers, tariff déjà vu has become an expensive habit. According to Governor Kathy Hochul, New York families have now shouldered an additional $13.5 billion in costs since 2018—an average burden of $1,751 per household—thanks to rounds of Trump-era tariffs that show little sign of abating. At breakfast tables in Queens and boardrooms on Wall Street alike, questions loom: Will these levies ever be rolled back, let alone refunded?

The latest escalation began after a Supreme Court ruling last month halted most of Donald Trump’s “Liberation Day” tariffs, which were draped in populist rhetoric and targeted at a medley of imports. Undeterred, the former president reached for another lever, invoking Section 122 of the Trade Act of 1974. This statute, seldom deployed at scale since Nixon’s day, allows a president to slap on temporary surcharges of up to 15% on imports—under narrowly defined circumstances.

Letitia James, New York’s attorney general, along with counterparts in 23 other states, is now preparing to challenge this authority in the Court of International Trade, housed, pointedly, in lower Manhattan. Their principal argument is less about partisan theatre than statutory limits: Section 122, they contend, was designed for moments of international monetary crisis or deep payment imbalances, not as a general cudgel against trade deficits or perceived foreign intransigence.

If their legal gambit succeeds, it would mark a rare judicial rebuke to the White House’s expansive use of trade laws, curbing the president’s ability to recalibrate global commerce by fiat. For New York, the first-order effects are starkly economic. From apparel importers hobbled by abrupt price increases, to manufacturers forced to pass on costs, the city’s intricate commercial web faces further tension. Already, the uncertainties around potential refunds—more than $100 billion in now-overruled tariffs hangs in administrative limbo—sap confidence from a sector craving predictability.

The pain does not end at the docks. The city’s legendary diversity owes much to affordable imported wares: Chinatown’s grocers, Bronx bodegas, and Brooklyn’s electronics shops have all reported dwindling margins and thinning clientele. Higher input costs ripple outward, nudging up consumer prices in a metropolis already groaning under its own cost structure. Small businesses, supposedly the lifeblood of the narrative both Trump and his challengers invoke, are left to haggle with suppliers and wary customers alike.

Second-order effects are subtler, yet perhaps more corrosive. New York’s port and freight sectors, which employ tens of thousands, are battered by the ever-shifting sands of tariff policy—rarely knowing which goods, which months, and which rates will apply. The slow pace of reimbursement for the now-invalidated “reciprocal” tariffs (a federal judge in Manhattan this week prodded the administration to finally address the backlog) has left importers in legal limbo, their capital tied up in Washington’s accounting ledger. Even those with stout balance sheets struggle to plan, invest, or hire when the rules of international exchange are subject to executive whim and judicial reprieve.

The political fallout is equally tangled. Democratic officeholders such as James and Hochul are keen to marshal outrage against Trump’s manoeuvres; but many voters, especially in the city’s outer boroughs, are less concerned with constitutional esoterica than with the visible uptick in grocery bills. Meanwhile, New York’s Congressional delegation—split between protectionist and globalist factions—offers little certainty as to the city’s long-term place in the American trade debate.

States versus the White House: setting national precedents in the courts

Elsewhere in the country, other governors and industry groups watch New York’s approach with interest, if not quiet alarm. America’s federal patchwork gives states certain standing to contest administrative actions, and the Court of International Trade has already signalled a willingness to scrutinize executive overreach. Yet the underlying drama is not uniquely American: major economies from Brussels to Beijing have flirted with—and often repented—the temptation to deploy tariffs for domestic gain.

What distinguishes the American case is the breadth of executive authority over trade. Section 122 was crafted during the economic turbulence of the 1970s, a period of sinking currency and global rebalancing. Its invocation today, absent any true payments crisis, may stretch credulity among the courts; but its staying power, as Trump’s successors have discovered, flows from Congress’s affable delegation of its trade powers. Therein lies a lesson for other democracies: be wary of designing economic “emergency” laws that outlast their purported moment of need.

Viewed globally, the past decade’s protectionist turn has proven a mixed blessing. America’s rivals have shown little inclination to bow to tariff pressure, while multinational firms have shifted supply chains, often at the cost of added complexity. For a city like New York, whose prosperity depends on open access to goods, people, and capital, the oscillation between opening and closure bodes poorly—especially as urban households lack the buffer of larger agrarian economies.

We reckon that New York’s lawsuit will be closely watched by corporate legal departments, trade economists, and politicians both here and abroad. Should the plaintiffs prevail, it may not mark the end of tariff experimentation—Congress, after all, remains content to let presidents dance at the edge of the law—but it would strengthen the hand of those who insist that trade policy, like most public policy, require at least the veneer of stability. A sceptic might argue that American importers will simply pass on the costs and move on; but in a city attuned to every penny, even small fluctuations have outsize political salience.

Still, the underlying lesson is as old as New York itself: in any tussle between authority and markets, those with the most receipts tend to get the final word. The city’s cosmopolitanism and resilience, routinely tested by Washington’s gyrations, are remarkable. Yet in the end, most New Yorkers would probably prefer that the price of Italian cheese or Thai electronics be driven by something more predictable than presidential impulse and legal brinkmanship.

The road ahead is likely to be neither swift nor smooth. Judges will parse the 1974 statute’s precise meaning; politicians will claim vindication, whatever the outcome. And, as ever, New Yorkers will balance on the knife-edge between national ambition and the local wallet, wondering whose tariffs, and whose courts, will matter most. ■