California Confronts Trump Tariffs With Lawsuit, Aiming to Shield Its $3.9 Trillion Economy

California, the nation’s economic powerhouse, is reeling from a wave of tariffs imposed by President Donald Trump. The state, home to sprawling farms, bustling ports, and countless small businesses, faces a daunting challenge: protecting its $3.9 trillion economy from trade policies that threaten to upend livelihoods. On April 16, 2025, Attorney General Rob Bonta and Governor Gavin Newsom filed a lawsuit against the Trump administration, arguing that the president’s use of emergency powers to enact tariffs is unlawful. The stakes are high, with ripple effects poised to touch every corner of the state.

The tariffs, enacted through a series of executive orders under the International Emergency Economic Powers Act (IEEPA), include a 25% levy on goods from Mexico and Canada, a 10% duty on imports from most other countries, and a staggering 145% on Chinese products. These measures, intended to protect American industries, have instead sparked fears of inflation, job losses, and market chaos. For Californians, the impact feels personal, from almond growers in the Central Valley to families budgeting for rising grocery bills.

The lawsuit, filed in the United States District Court for the Northern District of California, contends that the Constitution reserves the power to impose tariffs for Congress, not the president. By sidestepping legislative approval, the administration has ignited a legal and economic firestorm. Beyond California, other lawsuits, including one by the Liberty Justice Center representing small businesses, echo similar concerns, signaling a broader push to curb executive overreach.

This clash arrives at a precarious moment. Global trade is faltering, with the World Trade Organization projecting a 0.2% contraction in 2025, largely due to these tariffs. For a state that thrives on exports and imports, the uncertainty is palpable. The question now is whether California’s legal challenge can halt the tariffs and restore stability, or if the state will bear the brunt of a prolonged trade war.

California’s agricultural sector, a $59 billion juggernaut, is bracing for a harsh blow. As the nation’s top agricultural exporter, with $24 billion in global sales in 2022, the state relies heavily on open markets. Yet, retaliatory tariffs from China, Canada, and others are squeezing farmers. China’s 125% tariffs target California’s almonds, dairy, and citrus, while Canada’s 25% duties hit produce and wine. A UC Davis study estimates losses of up to $875 million for the almond industry alone, which produces 76% of the world’s supply.

Farmers like Christine Gemperle, an almond grower near Modesto, describe the situation as chaotic. Sales are slipping, and the rising cost of imported equipment adds insult to injury. Bianca Kaprielian, a citrus farmer in Reedley, reports similar struggles, with export markets shrinking fast. Unlike during Trump’s first term, when federal subsidies cushioned some losses, many California farmers find themselves ineligible for aid, leaving them to weather the storm alone.

The fallout extends beyond the fields. Transportation, logistics, and processing industries, which employ thousands across the Central Valley, face disruptions. Fresno, Kern, and Tulare counties, hubs for almonds, pistachios, and oranges, are particularly vulnerable. With countries like India and the European Union also imposing tariffs, California’s global market access is shrinking, threatening a sector that feeds millions.

Small businesses, the backbone of California’s economy, are grappling with the tariffs’ ripple effects. The 145% duties on Chinese goods and 10% on other imports have spiked the cost of raw materials and products. Ed Brzytwa of the Consumer Technology Association notes that small firms, unlike larger corporations, lack the resources to absorb these costs. Many face a grim choice: raise prices and risk losing customers, or eat the losses and court bankruptcy.

The tariffs’ impact on global supply chains compounds the problem. For example, wine importers like VOS Selections in New York struggle to adjust pricing due to regulatory constraints, a challenge mirrored by California’s retailers. The Yale Budget Lab projects that the tariffs will shrink U.S. GDP by 0.6% long-term, costing households an average of $4,900 annually in purchasing power. Low-income families, facing $2,200 in losses, will feel the pinch most acutely.

The stock market’s reaction underscores the broader economic toll. Following the announcement of the sweeping tariffs, the U.S. market suffered its largest two-day loss ever. For California’s small businesses, reliant on stable trade, the volatility breeds uncertainty, making it harder to plan or invest. As prices for clothing, electronics, and food climb, consumers are tightening their belts, further straining local economies.

At the heart of California’s lawsuit is a constitutional question: who controls the power to impose tariffs? The complaint argues that the IEEPA, enacted in 1977 to curb presidential overreach, does not grant Trump the authority to levy tariffs. Instead, the Constitution assigns that power to Congress. The state’s legal team invokes the Supreme Court’s major questions doctrine, which demands clear congressional approval for actions with vast economic impact.

Other lawsuits bolster this argument. The Liberty Justice Center, representing small businesses, and the New Civil Liberties Alliance, advocating for a Florida entrepreneur, contend that Trump’s actions lack precedent. Historically, presidents have used IEEPA for sanctions or asset freezes, not tariffs. The closest parallel, President Nixon’s 1971 import surcharge, predates IEEPA and was temporary. Courts have often deferred to presidents on IEEPA matters, but these cases test that deference in uncharted territory.

The outcome could reshape executive power. If the courts side with California, it may limit the president’s ability to enact trade policies unilaterally. If they uphold Trump’s authority, it could embolden future administrations to bypass Congress, raising concerns about checks and balances. For now, the legal battles underscore a growing tension between economic policy and constitutional limits.

The tariffs have reverberated far beyond California, straining global trade. The U.S.-China trade war, now at its peak with 145% American tariffs and 125% Chinese ones, threatens to fracture the world’s two largest economies. China’s suspension of critical mineral exports, vital for industries like semiconductors and defense, has heightened fears of supply chain breakdowns. The WTO’s director general warns of a troubling “decoupling” that could destabilize global markets.

North America faces a steep trade decline, with a projected 10% drop in 2025. Retaliatory tariffs from Mexico, Canada, and others have made U.S. exports, including California’s agricultural goods, less competitive. The Yale Budget Lab estimates that both the U.S. and Chinese economies will shrink by 0.6% long-term, a loss of $180 billion annually for the U.S. alone. As prices rise and growth slows, the specter of stagflation looms, complicating the Federal Reserve’s efforts to stabilize the economy.

California’s lawsuit marks a pivotal moment in the fight over trade policy. A victory could shield the state’s economy from further damage, offering relief to farmers, businesses, and families. But the road is fraught with challenges. Legal experts caution that courts may hesitate to curb presidential authority, given historical deference to IEEPA actions. Meanwhile, the tariffs’ economic toll continues to mount, with consumer prices projected to rise 3% in the short term, hitting essentials like food and clothing hardest.

For Californians, the battle is about more than legal principles; it’s about safeguarding a way of life. From the Central Valley’s orchards to San Francisco’s tech hubs, the state’s diverse economy hangs in the balance. As the courts weigh the case, the world watches, knowing that the outcome could redefine trade, power, and prosperity for years to come.