California Challenges Trump's Authority to Impose Tariffs

Newsom cites tariffs impact on California’s economy.

Governor Gavin Newsom and Attorney General Rob Bonta are seeking an injunction to block the Trump administration from implementing the president’s tariffs. In the lawsuit filed April 16, 2025, Newsom and Bonta argue that Trump’s tariffs are not authorized under the International Economic Emergency Powers Act (IEEPA). The lawsuit specially cited Trump’s 10% minimum tariffs on most countries, 145% tariffs on imports from China, and 25% tariffs on imports from Canada and Mexico.

The IEEPA grants the president broad authority to regulate certain financial transactions to deal with an “unusual and extraordinary threat with respect to which a national emergency has been declared…” Presidents have typically invoked the authority to place financial sanctions on countries, companies, and individuals. Previous presidents have not used the IEEPA to implement tariffs on imports.

“President Trump’s new tariff regime has already had devastating impacts on the economy, creating chaos in the stock and bond markets, wiping out hundreds of billions of dollars in market capitalization in hours, chilling investment in the face of such consequential presidential action with no notice or process, and threatening to push the country into recession,” according to the complaint.

The lawsuit states that California is directly harmed by the tariffs. “No state is poised to lose more than the state of California,” Newsom said. “So that’s our state of mind, and that’s why we’re asserting ourselves on behalf of 40 million Americans. And I imagine if you caucus those 40 million Americans, you’d find few... that are celebrating this uncertainty, that are celebrating the largest tax increase in modern U.S. history, in essence a sales tax.” Newsom noted the impact that tariffs would have on the technology and agriculture industries.

Newsom said the potential impact that the tariffs could have on California’s economy have forced him to cut the state’s baseline spending in the May budget. In January, Newsom proposed a $228.9 billion general fund budget, a cut of about $3 billion from the current year. The uncertainty from the tariffs and downgrading of California’s economy have forced Newsom to cut spending by more than the proposed $3 billion. Newsom has already asked California’s international trade partners to exclude products made in the state from tariffs imposed in retaliation to the Trump administration’s tariffs.

The U.S. Department of Justice asked that the lawsuit be moved from a California federal court to the U.S. Court of International Trade in New York, the Sacramento Bee reported. The Department of Justice argued that the case should be moved to the trade court because it has exclusive jurisdiction over tariffs and that the court is already overseeing other challenges to the tariffs. They also argued that the court should consolidate the cases.