Many groups, including Roman Catholics and even some of the Rabbinic Jews appeal to this passage to refute Justification by Faith alone, or in the case of the latter, try and refute Paul.
James is sadly the most abused letter in the NT and even some have gone as far as claiming he led the Ebionite sect, which lied against Paul rather than regarded him as a brother. Even James regarded him as a fellow apostle.
However the topic I desire to cover is whether or not James 2 refutes justification by faith alone. Let's read:
"14 What good is it, my brothers and sisters, if someone claims to have faith but has no deeds? Can such faith save them? 15 Suppose a brother or a sister is without clothes and daily food. 16 If one of you says to them, “Go in peace; keep warm and well fed,” but does nothing about their physical needs, what good is it? 17 In the same way, faith by itself, if it is not accompanied by action, is dead.
18 But someone will say, “You have faith; I have deeds.”
Show me your faith without deeds, and I will show you my faith by my deeds. 19 You believe that there is one God. Good! Even the demons believe that—and shudder.
20 You foolish person, do you want evidence that faith without deeds is useless[d]? 21 Was not our father Abraham considered righteous for what he did when he offered his son Isaac on the altar? 22 You see that his faith and his actions were working together, and his faith was made complete by what he did. 23 And the scripture was fulfilled that says, “Abraham believed God, and it was credited to him as righteousness,”[e] and he was called God’s friend. 24 You see that a person is considered righteous by what they do and not by faith alone.
25 In the same way, was not even Rahab the prostitute considered righteous for what she did when she gave lodging to the spies and sent them off in a different direction? 26 As the body without the spirit is dead, so faith without deeds is dead."
The context is speaking about a justification before men. James points out that Christians need to demonstrate their fruits and show their faith to the world. He is contrasting a faith that is active with a faith that is inactive. If one truly has faith, then his actions will show to other individuals that he has that faith. James is speaking about a declaring act of justification, NOT the actual act of aquittal:
Keith Thompson in his video "James 2 DOESN'T refute Sola Fide", quotes from Robert Reymond here to back up his point: https://www.youtube.com/watch?v=7HRFX9kkhno, Watch from 5:33-6:43.
The works that a person does are a demonstration of the person's faith, rather than a contributing factor to one's own salvation.
James even says to his audience in verse 18, SHOW ME your faith without deeds, which bolsters the point is that faith needs to be proved to men. If you claim to be a Christian yet your actions are not consistent with your profession of faith, one has to call into question as to whether you are actually in Christ. Unbelievers can tell if you have faith or not as well.
Robert Zins in the same video sums up faith in this way that "man is justified by faith alone but that faith is never alone" which is an accurate summary of what Sola Fide actually teaches.
Hope this answers the objection and I recommend checking out the video I linked to on this point.