Twenty-five states sued to strike down President Donald Trump’s latest tariffs as his administration told bond advisers and the public the duties were powering a manufacturing boom.
The coalition, led by the Democratic attorneys general of California, Arizona and Oregon, asked the U.S. Court of International Trade on Monday to block the administration’s forced-labor tariffs, its third attempt at broad import taxes after courts struck down the first two.
The same day the suit landed, the Treasury Department told its Borrowing Advisory Committee, the outside bankers and investors it consults on federal debt, that the economy was resilient and business investment strong. The White House separately said U.S. factories were expanding at their fastest pace in more than four years.
Independent analysts see the tariffs differently. The Tax Foundation estimates the duties now in place will cut long-run economic output and cost the average U.S. household about $900 this year. The Yale Budget Lab puts the household figure closer to $1,100.
The administration has not published an estimate of what the tariffs cost U.S. households or what share of imports they cover. Asked directly, the White House did not provide one.
White House spokesman Kush Desai told The Center Square the administration was using lawful authority to eliminate unreasonable foreign practices that burden U.S. commerce, arguing that a country’s failure to enforce a ban on forced-labor goods harms American workers. Section 301 tariffs, he said, have “proven to be a legally durable tool since the President’s first term, and they remain so now.” He did not address the cost question.
The Office of the U.S. Trade Representative, which imposed the tariffs and is a defendant in the lawsuit, did not immediately respond to a request for comment.
The states do not dispute that Section 301 has survived past court challenges; the Supreme Court declined in June to hear a separate case testing it. Their argument is narrower: that the administration used the forced-labor rationale as a pretext, investigating 60 economies in about two and a half months to reimpose tariffs that courts had already struck down. California Attorney General Rob Bonta said that’s a fraction of the time such trade inquiries typically take.
The stakes extend beyond the states. When the Supreme Court voided the administration’s original tariffs in February, the Congressional Budget Office estimated the loss would widen federal deficits by $2 trillion over a decade. The tariffs the states are now challenging are part of the administration’s effort to recover that revenue, an effort that, by outside estimates, has fallen short.
Edward J. López, a senior fellow at the Independent Institute, said the administration’s choice of legal authority does not change the tariffs’ economic effect.
“Regardless which section the administration finds harbor in, the economic consequences of a higher tariff remain the same,” he told The Center Square. U.S. consumers face higher prices, he said, and companies that rely on imported inputs scale back, putting jobs at risk.
López also questioned the administration’s growth claims. Consensus forecasts put 2026 growth in the low single digits, he said, and reaching the pace some in the White House have suggested would require an extraordinary surge in AI and other business investment.
The Committee for a Responsible Federal Budget estimated the forced-labor tariffs would raise about $900 billion over a decade. Even combined with new duties on Canada and Brazil, that’s not enough to replace what the earlier tariffs brought in. The Tax Foundation, isolating the Section 301 round, put its conventional revenue lower still, at about $630 billion.
The coalition includes 25 plaintiffs, 23 states and the Democratic governors of Kentucky and Pennsylvania. An earlier version of the same coalition saw much of its Section 122 challenge dismissed for lack of standing. The new state-led complaint argues the states are directly harmed because they pay the tariffs themselves, as importers and through vendors that pass along the cost.
The states asked the court to convene a three-judge panel, strike down the tariffs and order refunds.