Vermont Joins 21 States in Lawsuit Against Trump's 'Temporary' 15% Worldwide Tariffs
The legal and economic fallout of the new 15% surcharge hits close to home, as Vermont remains one of the most trade-dependent states in the Northeast.
Vermont Attorney General Charity Clark has joined a coalition of 21 other attorneys general and two governors in a high-stakes legal battle against the federal executive branch.
On March 5, 2026, the coalition filed a lawsuit challenging a new round of 15% global tariffs, marking a significant escalation in the dispute over the power to tax international goods. This case, State of Oregon, et al., v. Trump, et al., serves as a fundamental test of whether a president can unilaterally levy taxes under the guise of trade regulation.
The Core Conflict: Statutory Interpretation
At the heart of the lawsuit is a disagreement over how to define the nation’s economic health. The administration has invoked Section 122 of the Trade Act of 1974, which allows for a temporary surcharge to address “fundamental international payments problems.”
The administration argues that the current $1.2 trillion goods trade deficit constitutes such a problem, justifying a 15% surcharge. However, the coalition of states contends that a trade deficit in goods is not the same as a “balance-of-payments” crisis. They argue that Section 122 was designed for currency or liquidity emergencies—situations where a country lacks the reserves to maintain its currency value—which they claim do not exist in today’s modern floating-exchange-rate system.
How This Impacts Vermont
The legal and economic fallout of the new 15% surcharge hits close to home, as Vermont remains one of the most trade-dependent states in the Northeast. While the 150-day surcharge is global, specific exemptions and state-led litigation will determine the financial reality for local households and businesses.
Protection for Energy and Heating: Because Vermont is heavily dependent on Canada for its energy—importing nearly 100% of its natural gas and 80% of its fuel—the exemption for USMCA partners is a critical safeguard. Without this carve-out, natural gas rates in the state were projected to climb by at least 10%.
Stability for the Dairy Sector: Vermont’s agricultural industry relies on imported inputs like animal feed and fertilizer. By exempting basic agricultural staples and Canadian-origin goods, the surcharge avoids a direct cost shock to farmers operating on thin margins.
Impact on Local Manufacturing: Despite exemptions, many Vermont manufacturers who source industrial components from outside North America face the 15% surcharge. Local business leaders, such as Calef Letorney of Rovers North, have reported that previous tariff-related price hikes forced difficult decisions, including layoffs.
State-Led Legal Strategy: Attorney General Clark’s involvement is part of a broader effort to protect federal funding, including a separate lawsuit to preserve $3.4 million in Department of Energy grants awarded to the University of Vermont.
Contextualizing the Legal History
This new legal challenge follows a major Supreme Court ruling on February 20, 2026, which struck down a previous set of tariffs. In that case, the Court ruled that the administration could not use the International Emergency Economic Powers Act (IEEPA) to tax imports because that specific law did not explicitly grant the power to levy “duties” or “tariffs.”
In response, the White House pivoted to Section 122, which does explicitly mention a “temporary import surcharge.” This shift changes the legal question: the court is no longer deciding if the President can levy a duty, but rather if the specific economic conditions required by this law—a “balance-of-payments” crisis—are actually present.
Economic Impact: The “Who Pays” Debate
The debate over the economic consequences of these surcharges features competing data points:
Consumer and Business Burden: A Federal Reserve Bank of New York analysis found that nearly 90% of the cost of the 2025 tariffs was borne by U.S. firms and consumers rather than foreign exporters. Furthermore, the Yale Budget Lab projects that a 15% surcharge could cost the average American household between $600 and $800 over the next 150 days.
Revenue and Growth: Conversely, the administration points to the $287 billion in tariff revenue collected in 2025 as evidence of a benefit to the Treasury. They also cite a 4.3% GDP growth rate and steady job gains as evidence that these trade policies have not stifled the broader national economy.
Key Facts Beyond the Headlines
To understand the full scope of the current surcharge, it is important to note several details often omitted from initial reports:
The Sunset Clause: Unlike the previous tariffs, the Section 122 surcharge is strictly limited to 150 days unless Congress votes to extend it.
Significant Exemptions: The 15% surcharge is not universal. The administration has provided 13 categories of exemptions, including crude oil, natural gas, pharmaceuticals, and basic food staples.
The Refund Complication: While the Supreme Court struck down the old tariffs, the process of refunding the $134 billion already collected remains in litigation. Businesses may wait years to see that money returned.
Bipartisan Perspectives on Executive Power
While the current lawsuit is led primarily by Democratic Attorneys General, the underlying issue of executive overreach has drawn bipartisan concern. The recent Supreme Court ruling was praised by several prominent Republicans as a necessary defense of the separation of powers, emphasizing that the “power of the purse” should remain firmly with Congress.
What Happens Next
The case is now before the U.S. Court of International Trade. Because Section 122 surcharges have a 150-day expiration date, the court is expected to move quickly to determine if the administration’s economic justification meets the legal threshold. Meanwhile, federal trade officials have signaled they may use this window to launch more targeted investigations that could lead to different, longer-term tariffs in the future.