California has launched a lawsuit against President Donald Trump, seeking to put an end to his extensive tariff regime, which the state feels is being illegally implemented.
What Happened: On Wednesday, California became the first state to legally challenge the Trump administration’s extensive tariff plans. These plans have caused significant market instability and strained the United States’ relationships with its trading partners and allies, CNBC reported.
“Donald Trump does not have the authority to unilaterally impose the largest tax hike of our lifetime with his destructive tariffs,” stated California Gov. Gavin Newsom. The lawsuit argues that Trump’s invocation of the International Economic Emergency Powers Act to implement his reciprocal tariff plan is both “unlawful and unprecedented.”
The lawsuit, lodged in the U.S. District Court in northern California, seeks to have Trump’s tariffs “declared null and void,” indicating that the situation is causing “immediate and irreparable harm” to California—the nation’s largest state in terms of economy, manufacturing, and agriculture.
The White House has criticized Newsom over the lawsuit, with spokesman Kush Desai telling POLITICO that the Governor should instead focus on “California’s rampant crime, homelessness, and unaffordability.”
Notably, California has already filed 15 lawsuits against Trump since January. “That’s our state of mind,” said Governor Newsom. “That’s why we’re asserting ourselves on behalf of 40 million Americans.”
Why It Matters: This lawsuit comes on the heels of a similar legal action initiated by five American small businesses. These businesses accused Trump of abusing his powers to impose trade taxes under the guise of a national emergency, despite no such emergency existing.
The companies submitted the complaint to the U.S. Court of International Trade, arguing that Trump unlawfully invoked the International Emergency Economic Powers Act (IEEPA) to justify global tariffs on imports without Congressional approval or clear economic justification.
California’s lawsuit is significant as the state is not only home to large tech companies but also premium agricultural produce such as almonds, figs, olives, walnuts, raisins and artichokes. “As the fifth largest economy in the world, California understands global trade policy is not just a game,” said California Attorney General Rob Bonta.
The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ which track the S&P 500 index and Nasdaq 100 index, ended 2.22% and 3.02% lower, respectively, on Wednesday, according to Benzinga Pro data.
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