25 States Challenge New Tariffs as Businesses and Consumers Face Another Trade Fight

Twenty-five states sued the Trump administration on August 3, 2026, challenging new tariffs that began July 24 and putting another fight over import costs before the U.S. Court of International Trade.

The duties generally range from 10% to 12.5% on imports from 60 trading partners — 59 countries and the European Union — although certain products are exempt. The lawsuit does not automatically stop collection, and the court has not ruled on the merits.

What changed

The tariffs were imposed under Section 301 of the Trade Act of 1974 after a U.S. Trade Representative investigation into whether the covered economies failed to impose and effectively enforce bans on goods made with forced labor.

USTR announced the final action on July 23. The tariffs took effect July 24, as a temporary 10% worldwide tariff program expired. USTR said its process included two rounds of public hearings, more than 2,100 public comments, consultations with more than 45 governments, and additional comments and testimony on the proposed response.

Under the administration’s structure, economies that have adopted, committed to adopt or partially enforce forced-labor import prohibitions generally face a 10% duty. Other investigated economies generally face a 12.5% rate. The action covers most imports from the affected economies, with exemptions for categories including some raw materials, products vulnerable to supply disruptions and goods already subject to certain other tariffs.

Why the states are suing

The states argue that the forced-labor rationale is a pretext for restoring broad import taxes after the Supreme Court rejected the administration’s earlier use of emergency economic powers to impose tariffs. New York Attorney General Letitia James said the administration was again trying to raise taxes on families and businesses after losing at the Supreme Court.

Those are allegations in the states’ lawsuit, not findings by the court. The administration says Section 301 gives it authority to respond to unreasonable foreign practices that burden U.S. commerce. White House spokesman Kush Desai said the failure of foreign governments to prohibit and enforce bans on forced-labor goods harms American workers and must be addressed.

How this differs from the July cases

The multistate lawsuit follows two complaints filed in July by small businesses, including a toy company, a spice company and a watch retailer. Those cases make narrower Section 301 arguments: that USTR did not adequately establish its case against each specific economy or explain how the tariffs would address the practices cited in the investigations.

The new state challenge adds a broader argument about the administration’s purpose and its effort to replace an earlier worldwide tariff program under a different law. The administration is likely to rely on the separate statutory authority and the findings produced through the Section 301 investigation process.

What it means for importers and consumers

Tariffs are generally paid by U.S. importers to the government when goods enter the country. Importers may absorb the cost, seek lower prices from suppliers, change sourcing or pass some of the expense through supply chains. Retail prices could rise for some products, but the effect will vary by product, importer, competition and the available exemptions.

For now, businesses importing covered goods should generally budget for the additional 10% or 12.5% duty unless their products qualify for an exemption or later government or court action changes the rules. Consumers should not assume that every imported item will immediately become more expensive.

What happens next

The next important developments are likely to come from the Court of International Trade. The states could ask the court to halt collection while the case proceeds, and the administration is expected to defend both USTR’s investigation and its use of Section 301.

A successful challenge could affect future collections and potentially support refund claims, but neither a pause nor refunds has been ordered in this case. Until a court or the administration changes the tariff program, the duties remain in effect.

Sources

• Associated Press — 25 states sue over Trump’s new tariffs
• U.S. Trade Representative — Final Section 301 forced-labor tariff action
• The Washington Post — Small-business tariff lawsuits