Two U.S. small businesses have filed a lawsuit challenging President Donald Trump’s newly introduced “forced labor” tariffs, arguing that the administration exceeded its legal authority by imposing broad import duties on goods from 60 trading partners. The case, filed in the U.S. Court of International Trade, marks the latest legal challenge to the Trump administration’s tariff strategy after the U.S. Supreme Court earlier struck down a previous round of global tariffs imposed under emergency powers.
The lawsuit targets tariffs ranging from 10% to 12.5%, which took effect after the administration concluded that dozens of U.S. trading partners had failed to adequately prevent goods made with forced labor from entering global supply chains. The White House says the measures are intended to protect human rights and level the playing field for American workers, while critics argue the policy is an unlawful attempt to revive broad-based tariffs under a different legal authority.
Small Businesses Challenge Trump’s New Tariffs
The plaintiffs are:
- Burlap & Barrel, a spice importer.
- Collective Horology, a watch retailer.
Represented by the Liberty Justice Center, the businesses argue that the administration improperly used Section 301 of the Trade Act of 1974 to impose sweeping tariffs without making the detailed findings required under the statute regarding specific unfair trade practices by individual countries. They are asking the court to declare the tariffs unlawful, block their enforcement, and preserve their ability to obtain refunds for duties already paid if they ultimately prevail.
Lawsuit Snapshot
| Item | Details |
|---|---|
| Plaintiffs | Burlap & Barrel and Collective Horology |
| Court | U.S. Court of International Trade |
| Legal Basis Challenged | Section 301 of the Trade Act of 1974 |
| Tariff Rates | 10%–12.5% |
| Countries Affected | 60 trading partners |
What Are the ‘Forced Labor’ Tariffs?
The tariffs were announced after the expiration of an earlier temporary global tariff regime.
According to the Trump administration:
- Countries failing to adequately prevent exports made with forced labor face additional U.S. import duties.
- Tariffs generally range from 10% to 12.5%.
- The measures cover roughly 99% of U.S. imports.
- Existing trade agreements with some partners cap the applicable tariff rates.
- Certain products, including some essential commodities, remain exempt.
U.S. Trade Representative Jamieson Greer said the United States has long prohibited imports made with forced labor and that the new tariffs are intended to encourage trading partners to strengthen their own enforcement efforts.
Tariff Structure
| Category | Details |
|---|---|
| Lower Rate | 10% tariff for countries meeting higher compliance standards |
| Higher Rate | 12.5% tariff for countries with greater alleged deficiencies |
| Coverage | Approximately 99% of U.S. imports |
| Policy Objective | Encourage stronger action against forced labor in supply chains |
Plaintiffs Question the Legal Basis
The businesses contend that Congress did not authorize the president to impose such broad tariffs under the cited statute without country-specific findings.
Their arguments include:
- The tariffs exceed presidential authority.
- The administration failed to identify detailed unfair trade practices for each affected country.
- The policy increases costs for U.S. importers and consumers.
- The measures are unlikely to effectively address global forced labor concerns.
The lawsuit follows earlier court battles over Trump’s previous tariff programs, several of which were invalidated after courts ruled that the administration had exceeded the scope of its statutory authority.
Growing Legal and Political Challenges
This case represents the third major legal challenge to Trump’s recent tariff initiatives.
In addition:
- Democratic-led states are considering joining or supporting broader legal efforts.
- Business groups have warned that the tariffs could raise costs for importers and consumers.
- Several U.S. trading partners have criticized the measures and questioned the forced labor rationale used to justify them.
The Trump administration has not yet publicly responded to the new lawsuit.
Potential Business Impact
If the tariffs remain in place, businesses importing products from affected countries could face:
- Higher import costs.
- Increased consumer prices.
- Continued uncertainty over long-term sourcing decisions.
- Potential supply chain adjustments.
Conversely, if the court rules against the administration, importers may seek refunds for tariffs already paid, similar to earlier litigation involving previous Trump-era tariff programs.
Looking Ahead
The lawsuit filed by Burlap & Barrel and Collective Horology adds another significant legal test for the Trump administration’s evolving trade strategy. By challenging the legal foundation of the new “forced labor” tariffs, the plaintiffs argue that the administration has once again stretched presidential authority beyond what Congress intended, despite framing the measures as part of a broader effort to combat forced labor in global supply chains.
Looking ahead, the outcome of the case could shape the future of U.S. trade policy by clarifying the limits of presidential tariff powers under the Trade Act of 1974. A ruling against the administration could not only halt enforcement of the tariffs but also influence future attempts by any administration to use trade laws to impose broad import duties without explicit congressional authorization.
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