A U.S. federal judge has dismissed California's lawsuit challenging President Donald Trump's tariffs, based on jurisdictional grounds, while allowing the state to pursue an appeal in a court seen as more favorable to its arguments.

U.S. District Judge Jacqueline Scott Corley in San Francisco ruled late Monday that the case belonged in the specialized U.S. Court of International Trade (CIT) in New York, which handles tariff disputes. However, she granted California's request to dismiss the case entirely rather than transferring it, enabling the state to appeal directly to the U.S. Ninth Circuit Court of Appeals as the state requested.

California Attorney General Rob Bonta stated in a press release Monday night that the move is a "critical step" to protect the state's economy, which faces an estimated 25 billion U.S. dollars in consumer costs and 64,000 job losses due to the tariffs.

"We strongly believe this case belongs in federal district court," Bonta said in the statement, arguing the International Emergency Economic Powers Act (IEEPA) does not authorize tariffs. "Trump doesn't have the authority to impose these destructive tariffs."

The dismissal reflects California's legal strategy to avoid the CIT, where Trump's tariffs have faced mixed rulings. Last week, CIT blocked the tariffs in a separate case brought by 12 states led by Oregon, ruling that Trump exceeded his authority under the IEEPA. That decision is paused pending appeal.

The Monday ruling also marked a strategic pivot in a high-stakes legal clash over presidential authority and trade policy.

Corley's ruling did not address the tariffs' legality but emphasized jurisdictional protocol. "This action arises out of laws providing for tariffs, and this court is divested of jurisdiction," she wrote. Legal experts noted the Ninth Circuit, known for liberal-leaning decisions, could reinstate the case in district court if it sides with California's constitutional arguments.

Trump's "Liberation Day" tariffs, announced in April, imposed a 10 percent baseline duty on imports from most trading partners, with rates as high as 145 percent for China. The policies have triggered market volatility, with businesses criticizing erratic adjustments. The Port of Los Angeles reported a 30 percent drop in May shipments, while Central Valley farmers in California faced retaliatory tariffs on 23 billion dollars in U.S. agricultural exports.

The legal battles now span three appellate courts, with the Supreme Court likely to resolve conflicting rulings. Legal scholars argued that the cases test Congress's constitutional authority over trade, which has been increasingly delegated to the president since the 1930s.

California's appeal to the Ninth Circuit is expected within days, setting up a separation-of-powers debate.