- Two small businesses — New York spice importer Burlap & Barrel Inc. and California watch importer Collective Horology LLC — filed suit in the US Court of International Trade in Manhattan within hours of Trump’s Section 301 forced-labor tariffs taking effect on July 24, represented by the Liberty Justice Center, which also challenged both of Trump’s previous sets of global tariffs; the new duties, set at 10-12.5% and covering approximately 60 economies that the USTR accuses of failing to ban imports made with forced labor, affect nearly all US trading partners and represent the third legal mechanism the administration has attempted to use for sweeping global tariffs after Trump’s first set was struck down by the Supreme Court (which ruled the emergency law invoked didn’t grant tariff powers) and a second set under Section 122 of the Trade Act expired and remains in separate litigation.
- The first legal challenge argues Trump exceeded Section 301’s statutory authority: Section 301 permits the USTR to act only after determining that a specific “act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts” US commerce — a requirement that the plaintiffs argue demands country-specific findings, not the blanket global framework the administration applied; the USTR’s June 2 forced-labor investigation report is central to this challenge, as it assessed only whether countries have a formal legal prohibition on forced-labor imports and whether they are enforcing it — explicitly not whether specific products from specific countries are actually made with forced labor, which the plaintiffs argue renders the factual predicate for the tariffs legally defective under the statute’s own terms.
- The second challenge invokes the Administrative Procedure Act’s bar against government action that is “arbitrary, capricious, and contrary to law”: the plaintiffs argue that the USTR “failed to provide a reasoned explanation” for the specific tariff rate applied to each affected country, and that a “generalized conclusion that forced labor distorts global commerce does not rationally support the imposition of broad tariffs on a particular economy’s products without an explanation of that economy’s particular role in causing a burden or restriction on United States commerce” — a standard of reasoned decision-making that courts have applied rigorously to agency actions since the Supreme Court’s landmark administrative law jurisprudence, and one that has become a frequent basis for injunctive relief against executive agency rule-making.
- The third and most constitutionally far-reaching challenge invokes the nondelegation doctrine, arguing that if the administration’s broad interpretation of Section 301 is correct, then Section 301 itself may violate the Constitution’s vesting of taxing and commerce-regulating authority in Congress; the nondelegation doctrine requires that when Congress delegates authority to the executive branch, it must provide an “intelligible principle” that meaningfully constrains how that power is exercised — and the plaintiffs argue that Section 301’s targeted trade-remedy design does not provide such a principle for using it as a general global tariff mechanism; while nondelegation challenges have rarely succeeded in modern jurisprudence, the current Supreme Court’s textualist majority has shown greater willingness to engage with delegation limits than any court in decades.
What Happened?
Trump’s newest global tariffs — 10-12.5% duties on ~60 economies under Section 301 of the Trade Act of 1974, justified by those countries’ alleged failure to ban imports made with forced labor — were challenged in federal court within hours of taking effect on July 24. Two small businesses represented by the Liberty Justice Center filed suit in the US Court of International Trade, raising three independent grounds: the tariffs exceed Section 301’s statutory authority, violate the APA’s reasoned-decision-making requirement, and may be unconstitutional under the nondelegation doctrine. This is the third consecutive set of Trump global tariffs to face legal challenge — his first set was struck down by the Supreme Court, and Section 122 tariffs expired amid separate litigation.
Why It Matters?
The pattern of legal challenges to Trump’s successive tariff mechanisms reveals a fundamental tension between the administration’s desire for sweeping, presidentially-controlled import taxes and the statutory frameworks Congress actually enacted, which were designed as targeted trade remedies rather than general tariff vehicles. For businesses, each successful challenge and subsequent tariff replacement creates compounding uncertainty — supply chains restructured around one set of tariff rates must be re-evaluated when a new mechanism takes effect; for markets, the litigation timeline could invalidate the Section 301 tariffs months after importers have already paid duties, creating refund exposure for the government and retroactive accounting complications for businesses. The nondelegation argument, in particular, represents a high-stakes constitutional theory that, if accepted, could constrain presidential tariff authority well beyond this specific set of duties.
What’s Next?
The US Court of International Trade will first consider whether to grant a temporary restraining order or preliminary injunction to halt the tariffs while litigation proceeds — the Liberty Justice Center’s track record of winning such interim relief on the earlier tariff cases makes this an immediate risk for the administration. The government will argue the forced-labor justification provides a sufficiently different legal foundation from the previously struck-down mechanisms. The case is likely to move quickly given the economic stakes; a decision from the Court of International Trade could arrive within weeks, with appeals to the Federal Circuit and potentially the Supreme Court to follow. Watch also for parallel challenges from larger trade associations and importers, who have more resources to litigate and may file separately on overlapping grounds.
Source: Bloomberg
