(Bloomberg) — California Governor Gavin Newsom sued to halt Donald Trump’s tariffs, setting up a high-stakes legal challenge to the president’s landmark effort to overhaul global trade.
Most Read from Bloomberg
The state is challenging Trump’s use of emergency powers to enact broad tariffs against Mexico, China and Canada. The governor cited harm to consumers and businesses, including those in agriculture and entertainment, in California, which has the world’s fifth-largest economy.
“President Trump’s new tariff regime has already had devastating impacts on the economy, creating chaos in the stock and bond markets, wiping out hundreds of billions of dollars in market capitalization in hours, chilling investment in the face of such consequential presidential action with no notice or process, and threatening to push the country into recession,” according to the complaint filed Wednesday in San Francisco federal court.
Newsom, a Democrat who’s considered a likely candidate to run for president in 2028, and California Attorney General Rob Bonta are seeking a court order to immediately block the levies. “No state is poised to lose more than the state of California,” Newsom said at a press conference as he warned of dire consequences for the state’s budget and economy.
In a statement, a White House spokesperson said, “Instead of focusing on California’s rampant crime, homelessness, and unaffordability, Gavin Newsom is spending his time trying to block President Trump’s historic efforts to finally address the national emergency of our country’s persistent goods trade deficits.”
Trump’s unprecedented use of the International Emergency Economic Powers Act, or IEEPA, to impose tariffs on imports has rattled markets, prompted forecasts of a potential recession and strained relationships with overseas trading partners.
The IEEPA, passed in 1977, gives the president broad authority to regulate certain financial transactions when declaring a national emergency in response to an “unusual and extraordinary threat.” It has traditionally been used to place sanctions on countries, companies and individuals.
Trump became the first president to use the statute to impose tariffs when he announced levies in February against China, Mexico and Canada to respond to the “extraordinary threat” of undocumented immigrants and illegal drugs moving through US borders. In April, Trump cited what he says is the country’s persistent trade deficit.
Is Trump’s Use of Emergency Law for Tariffs Legal?: QuickTake
The president is already facing at least three legal challenges to his tariffs, though major industries caught in the tariff crossfire have held off from any legal action for now. Two complaints were filed by conservative legal advocacy groups on behalf of small businesses, and the third by members of the Blackfeet Nation tribe in Montana.
California’s suit, like the previous cases, alleges that the IEEPA doesn’t give Trump authority to impose tariffs and that his actions violate the law absent congressional approval.
“Congress hasn’t authorized these tariffs, much less authorized imposing tariffs only to increase them, then pause them, then imminently reinstate them on a whim, causing our nation and the global economy whiplash,” Bonta said at the press conference.
Justice Department lawyers have argued that the tariff challenges should be handled by the Court of International Trade in New York, which specializes in lawsuits against the government over trade issues, and are seeking to transfer cases filed in US district courts to the trade court.
California Economy
California, a reliably Democratic state, has already challenged an executive order Trump issued to end birthright citizenship and the administration’s freeze on federal grants and loans.
Newsom has positioned himself as a national voice on issues from climate change to abortion rights. His second term ends in 2026, leading to speculation he will run for president.
California accounts for roughly 14% of the nation’s gross domestic product, has a 40 million population and would be considered one of the largest economies in the world if it were a standalone country. Newsom has said that its economic weight gives California leverage on the global stage, but it also makes it vulnerable to tariffs.
The state plays a crucial role in agriculture and US manufacturing, including semiconductors, computer equipment and vehicles. It exported $24 billion in agricultural goods in 2022, nearly 13% of total US farm exports. Almonds were the biggest contributor at $4.7 billion, followed by dairy products, pistachios and wine, with top buyers including Canada, the European Union, China and Hong Kong.
Newsom said the impact of the tariffs have already forced him to adjust the state budget he’ll be submitting in May. The revised budget will “reflect a downgrade in economic outlook in this state,” he said at the press conference, adding that he expects a dip in economic growth and capital gains revenue.
State and independent economists Newsom met with in recent weeks informed him that “they have significantly downgraded the GDP projections for the state of California next year, have increased, as a consequence of this toxic uncertainty, the likelihood that our unemployment rate will go up, not down, and that the environment will precipitate in higher inflation,” the governor said.
Newsom has previously said he would seek to insulate the state from Trump’s tariff plan by going directly to global trading partners and seeking exemptions, even though its unclear how he could pursue international agreements with foreign partners.
The case is State of California v. Trump, 25-cv-03372, US District Court, Northern District of California.
–With assistance from Pierre Paulden and Eliyahu Kamisher.
(Updates with Newsom’s comments at press conference starting in fourth paragraph. A previous version of this story corrected the location of the Court of International Trade.)
Most Read from Bloomberg Businessweek
©2025 Bloomberg L.P.
The post California’s Newsom Sues Trump Over ‘Chaos’ of Tariff Regime appeared first on Bloomberg.
