A dramatic new legal battle is unfolding in Washington that could reshape the balance of power between the presidency and Congress. Just days after the Supreme Court struck down Donald Trump’s sweeping tariffs, the former president attempted a rapid comeback—invoking a little-known provision of the 1974 Trade Act. Now, a coalition of 24 states led by New York Attorney General Letitia James has filed a lawsuit that may determine whether the executive branch can still reshape global trade without Congress.
The confrontation began on February 20, when the Supreme Court delivered a historic ruling limiting presidential authority over tariffs. The justices declared that taxation powers rest with Congress, not the executive branch, effectively nullifying the administration’s “Liberation Day” tariffs. Within hours, Trump announced a new plan: a blanket 10 percent tariff on imports under Section 122 of the Trade Act of 1974.
Few in Washington had even heard of Section 122. Passed during the era of fixed exchange rates, it was designed to address severe balance-of-payments crises—economic conditions that have not existed in the United States since the collapse of the Bretton Woods system in the early 1970s. Economists and legal scholars quickly questioned whether the statute could apply in today’s global economy, where currencies float and trade deficits are not treated as currency emergencies.
Two days later, James and attorneys general from more than half the country filed suit in the U.S. Court of International Trade. Their argument: Trump’s move is not only legally flawed but directly contradicts his own administration’s previous court filings. During earlier litigation, Justice Department lawyers had argued that Section 122 was irrelevant to Trump’s tariff goals—a statement now being used as evidence against the former president.
“This is not just another policy dispute,” one constitutional law professor told reporters. “It’s a test of whether a president can keep searching for new legal tools after the courts have said ‘no.’”
The lawsuit also highlights the technical requirements of Section 122. The law allows tariffs only in response to a “large and serious balance-of-payments deficit” and mandates that such measures be temporary and applied uniformly. Critics say the current economic data shows no such deficit and that the new tariffs include numerous exemptions, undermining the law’s intent.
Business leaders are watching closely. Many companies had already paid tariffs that were invalidated by the Supreme Court and are awaiting refunds. Now, some are being asked to pay again under the new policy, creating uncertainty that analysts say is affecting investment decisions and market stability.
Supporters of the former president argue the lawsuit represents political resistance to his economic agenda. They maintain that tariffs are a legitimate tool for protecting American industry and that the executive branch has historically exercised wide discretion in trade policy. Yet even some Republican lawmakers privately acknowledge that the legal ground is shaky and that the issue could ultimately require congressional action.
The case is moving quickly. Judges have scheduled expedited hearings to determine whether to block the tariffs while the litigation proceeds. Legal experts say the court’s decision could set a lasting precedent—either closing the door on unilateral tariff authority or leaving it open for future administrations.
Beyond the courtroom, the conflict carries political and historical significance. The United States has long wrestled with the limits of executive power in economic crises, from the New Deal era to post-9/11 security measures. This latest dispute raises a familiar question: how far can a president go in the name of national interest before constitutional boundaries are crossed?
For now, the outcome remains uncertain. If the courts side with the states, the ruling could reinforce congressional control over trade policy and mark another setback for Trump’s economic strategy. If the administration prevails, it could expand the scope of presidential authority in ways not seen in decades.
Either way, the battle over Section 122 is more than a legal technicality. It is a high-stakes test of American governance—one that could influence the nation’s economic direction, political debates, and constitutional order for years to come.