A legal battle over President Donald J. Trump’s executive orders imposing new tariffs has seen a significant development in the United States District Court for the Northern District of California.
In an order issued Monday, the court denied the Government’s motion to transfer the case to the U.S. Court of International Trade (CIT) and instead dismissed the lawsuit brought by the State of California, effectively punting the high-stakes trade dispute to the specialized customs court.
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The lawsuit, filed by California Attorney General Rob Bonta and Governor Gavin Newsom, challenged President Trump’s series of executive orders, which began on February 1, 2025, imposing, pausing, and modifying tariffs on imports from countries including Mexico, Canada, and China, as well as a universal reciprocal tariff on all trading partners.
California argued that these tariffs were “ultra vires” (beyond legal authority) under the International Economic Emergency Powers Act (IEEPA) and violated the separation of powers by usurping Congress’s constitutional power to lay and collect taxes and duties.
The core of the District Court’s decision centered on the question of jurisdiction. The Government contended that the CIT held exclusive jurisdiction over cases arising from laws providing for tariffs.
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The court agreed, concluding that President Trump’s executive orders, which modify the Harmonized Tariff Schedule of the United States (HTSUS), are considered “statutory provisions of law for all purposes.” Therefore, the lawsuit “arises out of a law of the United States providing for… tariffs,” placing it squarely within the CIT’s purview.
In its ruling, the court highlighted Congress’s intent in establishing the CIT’s broad residual jurisdiction to ensure a “comprehensive system of judicial review of civil actions arising from import transactions” and to prevent conflicting decisions on international trade matters.
The order noted that the CIT has already taken up similar challenges to these executive orders, with several cases currently before it, and some already seeing rulings. For instance, on May 28, 2025, the CIT granted summary judgment to plaintiffs in V.O.S. Selections, Inc. v. United States and Oregon v. Trump, asserting its exclusive jurisdiction under Section 1581(i).
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While the Government sought to transfer the case to the CIT under 28 U.S.C. § 1631, which allows for transfer when a court lacks jurisdiction and it is “in the interest of justice,” California explicitly requested dismissal instead. California’s legal team expressed a desire to appeal the District Court’s jurisdictional ruling to the Ninth Circuit.
The court acceded to California’s request, finding that denying the transfer and dismissing the case without prejudice served the “interest of justice” by allowing for appellate review of the jurisdictional question.
“Normally transfer will be in the interest of justice because normally dismissal of an action that could be brought elsewhere is time-consuming and justice-defeating,” the order stated, but emphasized that the “interest of justice” analysis primarily considers the plaintiff’s interests. Given California’s clear preference for dismissal to facilitate an appeal, the court determined that transfer over their objection was not warranted.
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