WASHINGTON (AP) — Some two dozen states, including Nevada, challenged President Donald Trump's new global tariffs on Thursday, filing a lawsuit over import taxes he imposed after a stinging loss at the Supreme Court.

The Democratic attorneys general and governors in the lawsuit argue that Trump is overstepping his power with planned 15 percent tariffs on much of the world.

Trump has said the tariffs are essential to reduce America's longstanding trade deficits. He imposed duties under Section 122 of the Trade Act of 1974 after the Supreme Court struck down tariffs he imposed last year under an emergency powers law.

Section 122, which has never been invoked, allows the president to impose tariffs of up to 15 percent. They are limited to five months unless extended by Congress.

The lawsuit is led by attorneys general from Oregon, Arizona, California and New York.

“The President is trying a new legal theory to reach the same unlawful result,” Nevada Attorney General Aaron Ford (D) said in a statement. “We are going back to court to defend Nevada consumers, protect our economy, and uphold the separation of powers.”

Already, Nevada consumers have seen some of the steepest price hikes nationwide under the Trump administration. Over an eight-month period in 2025, the average Nevada family saw prices rise more than $900 because of inflation. Between February 2025 and November 2025, tariffs cost the average American household about $1,200, according to a report by Congressional Democrats on the Joint Economic Committee.

While many gaming developers and casino equipment manufacturers said they’ve been able to adjust for the changing tariff landscape, the impact of the import taxes has been felt more heavily by businesses such as retailers and auto dealers. The Retail Association of Nevada said they planned on joining other trade organizations in asking that funds be returned. 

Last May, Wynn Resorts also delayed a remodeling project because of concerns about how tariffs could affect the cost. The company said in August that costs for the $300 million renovation had increased by 10 percent. 

White House vows vigorous defense

The White House said Trump is acting within his power. 

“The President is using his authority granted by Congress to address fundamental international payments problems and to deal with our country’s large and serious balance-of-payments deficits,” said spokesman Kush Desai. “The Administration will vigorously defend the President's action in court.”

The new suit argues that Trump can’t pivot to Section 122 because it was intended to be used only in specific, limited circumstances — not for sweeping import taxes. It also contends the tariffs will drive up costs for states, businesses and consumers.

Arizona Attorney General Kris Mayes pointed to a New York Federal Reserve Bank study that found Americans largely bear the cost of the tariffs, which has been estimated at $1,200 a year per household. "That is money out of the pockets of American families trying to buy groceries, pay rent and keep their small businesses afloat," Mayes said.

Many of the plaintiff states also successfully sued over Trump's tariffs imposed under a different law: the International Emergency Economic Powers Act (IEEPA).

Four days after the Supreme Court struck down his sweeping IEEPA tariffs Feb. 20, Trump invoked Section 122 to slap 10 percent tariffs on foreign goods. Treasury Secretary Scott Bessent told CNBC on Wednesday that the administration would raise the levies to the 15 percent limit this week.

The Democratic states and other critics say the president can't use Section 122 as a replacement for the defunct tariffs to combat the trade deficit.

The Section 122 provision is aimed at what it calls “fundamental international payments problems.” At issue is whether that wording covers trade deficits, the gap between what the U.S. sells other countries and what it buys from them.

Section 122 arose from the financial crises that emerged in the 1960s and 1970s when the U.S. dollar was tied to gold. Other countries were dumping dollars in exchange for gold at a set rate, risking a collapse of the U.S. currency and chaos in financial markets. But the dollar is no longer linked to gold, so critics say Section 122 is obsolete.

Awkwardly for Trump, his own Justice Department argued in a court filing last year that the president needed to invoke the emergency powers act because Section 122 did "not have any obvious application" in fighting trade deficits, which it called “conceptually distinct”' from balance-of-payment issues.

Still, some legal analysts say the Trump administration has a stronger case this time.

“The legal reality is that courts will likely provide President Trump substantially more deference regarding Section 122 than they did to his previous tariffs under IEEPA,” Peter Harrell, visiting scholar at Georgetown University’s Institute of International Economic Law, wrote in a commentary Wednesday.

The specialized Court of International Trade in New York, which will hear the states’ lawsuit, wrote last year in its own decision striking down the emergency-powers tariffs that Trump didn’t need them because Section 122 was available to combat trade deficits.

Trump does have other legal authorities he can use to impose tariffs, and some have already survived court tests. Duties that Trump imposed on Chinese imports during his first term under Section 301 of the same 1974 trade act are still in place.

Also joining the lawsuit are the attorneys general of Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, North Carolina, Rhode Island, Vermont, Virginia, Washington, Wisconsin, and the governors of Kentucky and Pennsylvania.