Newsom announces lawsuit against Trump’s tariffs as California stands to lose billions
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- California announced a lawsuit contesting President Trump’s executive authority to enact international tariffs without congressional approval.
- The state stands to lose billions in revenue under Trump’s tariff policies.
California Gov. Gavin Newsom on Wednesday announced a lawsuit contesting President Trump’s executive authority to enact international tariffs without congressional support, which he likened to the commander in chief taking a “wrecking ball” to America’s global reputation.
The legal action argues that the International Emergency Economic Powers Act that Trump cited to impose tariffs does not grant the president the ability to unilaterally adopt tariffs on goods imported to the U.S. The suit from California is the first challenge from any state against Trump’s trade policy.
“No state is poised to lose more than the state of California,” Newsom said about Trump’s tariffs. “That’s why we’re asserting ourselves on behalf of 40 million Americans.”
The case marks the first time Newsom has taken a lead role in any of the now 15 lawsuits that California has filed against the current Trump administration, signaling a deviation from his more reserved approach to the president during Trump’s second term. Until now, state Atty. Gen. Rob Bonta has acted as the face of California’s legal battles against the federal government, while Newsom has generally maintained a distance from the back-and-forth court tussles.
Newsom said he chose to take action after absorbing the effects of the tariffs over the last few weeks.
“He is betraying the people that supported him,” Newsom said. “Donald Trump has turned his back on his supporters.”
The economic whiplash over President Trump’s tariffs underscores the challenge before lawmakers and Gov. Gavin Newsom to fund schools, healthcare, roadways and other essential services.
Under the International Emergency Economic Powers Act, Trump has implemented 10% baseline tariffs on all imported goods, higher taxes on goods from Mexico, Canada and China, and specific levies on products and materials such as autos and aluminum. The president threatened and then paused additional tariffs on other nations until this summer.
California, which the governor’s office said engaged in nearly $675 billion in two-way trade last year, stands to lose billions in state revenue under Trump’s tariff policies if international commerce declines and the stock market tanks. Mexico, Canada and China represent the state’s three largest trade partners.
“The gravity and instability of the situation at hand cannot be overstated,” Bonta said. “The risk to California, to our businesses, our workers, our families, cannot be overstated.”
Newsom showed glimpses Wednesday of the Democratic firebrand he’s known for as he implored Republicans in Congress to do their jobs.
“They’re sitting there passively as this guy wrecks the economy of the United States of America, which has dominated the global economy,” Newsom said.
The governor’s shifts between attacking Trump and, at times, staying mum about controversial White House actions show that Newsom is trying to find his footing on how to effectively deal with Trump in his second term.
Newsom not only leads a state under constant threat of losing essential federal funding for disaster recovery, education and healthcare, but he’s also a national figure in a Democratic Party that is rekindling its resistance to Trump after the November election.
Although Democrats have struggled to articulate a message about what they stand for, Trump’s tariffs are giving them an unpopular issue to stand against, said Mike Madrid, a Republican political consultant.
“A politician who is not attacking would be making a very big mistake,” Madrid said. “Trump gave them an opening that they did not create themselves.”
Since the wildfires decimated Pacific Palisades and Altadena in January, Newsom has tried to pick his battles to avoid jeopardizing his working relationship with Trump and endangering federal support needed to rebuild. He repeatedly pointed to the negative effects of the tariffs on the state budget and economy Wednesday to explain his reasoning for speaking up.
The “toxic uncertainty” over tariffs, he said, probably will lead to higher unemployment, higher inflation, lower GDP projections and less capital gains revenue for California. The economic fallout could leave the state with a considerable deficit to overcome and limited ability to backfill the losses without making sizable cuts to programs.
Newsom said his proposed state budget “will reflect a downgrade in economic outlook in this state.”
“So the impacts on the budget of the state are already being felt and the full impact has not fully been felt,” he said.
American tech firms grappled with more uncertainty Monday, left to decipher whether they could rely on a tariff exemption for businesses key to the U.S. economy.
California’s legal case rests on an argument that the International Emergency Economic Powers Act, which specifies the actions the president can take if he declares a national emergency in response to a foreign national security, foreign policy or economic threat, does not give Trump the authority to enact tariffs.
“The reality is the U.S. Constitution gives Congress the power of the purse,” Bonta said. “It’s Congress’ responsibility to set and collect taxes, duties and excises, including, yes, tariffs, not the president’s. Congress hasn’t authorized these tariffs, much less authorized imposing tariffs only to increase them, then pause them, then imminently reinstate them on a whim, causing our nation and the global economy whiplash. Trump is attempting to override Congress and steamroll the separation of powers.”
The tariffs appear to be on weak legal ground, given the president’s decision to rely on the International Emergency Economic Powers Act, said Stratos Pahis, associate professor of law and co-director of the Block Center for the Study of International Business Law at Brooklyn Law School.
Pahis said Congress has delegated the president the power to raise tariffs in response to unfair trade practices or for national security reasons under a separate law called the Trade Act, which imposes substantive and procedural constraints, such as generally requiring an investigation to be conducted on a country-by-country or goods-by-goods basis. The Trade Act does not allow the administration to wake up one day and impose 10% tariffs on every country in the world and on every good that comes in, he said.
“So that’s the Trade Act, which is the normal grounds for the executive to impose or raise tariffs. Of course, the president is not using that. The president is using the International Emergency Economic Powers Act,” Pahis said.
The IEEPA has never been used to impose tariffs and does not explicitly mention tariffs.
Pahis said a strong argument against using the law to impose tariffs is that it requires the president to declare a national emergency and the president to find that there are unusual and extraordinary threats to the U.S., to U.S. national security or the economy.
“And that’s where I think the law is most likely to fail because it’s very hard to understand the threats that the president has identified as unusual or extraordinary,” Pahis said. He noted that the trade deficits and loss of manufacturing that Trump is citing are the consequences of U.S. trade policy that the country has deliberately pursued for 80 years.
The complaint asks the U.S. District Court for the Northern District of California to void Trump’s tariff orders, according to Bonta’s office.
Pahis said it’s possible, but also unprecedented, for Trump to rely on the Trade Act and conduct the required investigation, without turning to Congress, to legally impose the 10% across-the-board tariffs if the federal government loses the case.
Requiring Congress to take a vote in Washington to adopt tariffs or allow Trump to enact tariffs could place Republican lawmakers in a vulnerable political position in the midterm elections. A recent poll from CBS News showed that 58% of Americans opposed the U.S. tariffs on imported goods.
Times staff writer Kevin Rector contributed to this report.
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