Two small businesses sued the Trump administration Friday over its new tariffs targeting forced labor, teeing up another legal fight over President Donald Trump’s trade policy.
The lawsuit, filed in the U.S. Court of International Trade, argues that the administration unlawfully used Section 301 of the Trade Act of 1974 to impose tariffs of between 10 percent and 12.5 percent on products from 60 economies, including Canada, Mexico and the European Union. The duties took effect Friday, immediately replacing a temporary 10 percent global surcharge as its statutory window expired.
The plaintiffs, Burlap & Barrel, a New York spice importer, and Collective Horology, a California watch retailer, argue that the Office of the U.S. Trade Representative failed to show how each economy’s forced labor policies burden U.S. commerce or how the tariffs would change those policies. The companies are represented by Liberty Justice Center, a libertarian public-interest law firm that successfully challenged Trump’s previous tariffs in the Supreme Court case.
“Forced labor is morally indefensible, but an important objective does not give the government permission to ignore the law,” Liberty Justice Center Chair and CEO Sara Albrecht said in a press release announcing the move. “The administration allowed one global tariff to expire and immediately replaced it with another under a different statute. Changing the statute doesn’t change the law. Every tariff authority has limits, and every administration must respect them.”
The firm’s lawyers helped overturn tariffs Trump imposed last year under the 1977 International Emergency Economic Powers Act and later won a lower court ruling against the temporary surcharge imposed under Section 122 of the Trade Act of 1974, although that ruling was stayed pending appeal.
“These tariffs would punish a responsible American business, and the farmers we work with, without showing how taxes on our spices would address the policies of foreign governments that USTR says it is targeting,” said Ethan Frisch, co-founder and co-CEO of Burlap & Barrel, according to the press release.
The lawsuit also argues that the similarity between the new duties and the tariffs Trump previously imposed under IEEPA helps show that the administration settled on the tariff policy before completing its Section 301 investigations.
A separate group of businesses led by educational-products maker Learning Resources also filed suit at the CIT later Friday, making a parallel argument and asking for a three-judge panel to hear their challenge. Learning Resources was a plaintiff in the Supreme Court case that struck down Trump’s IEEPA tariffs.
The White House did not respond to a request for comment.
Background: The tension settles on Trump’s use of Section 301, an authority widely viewed as much more legally durable compared to other authorities Trump tapped to impose tariffs. Duties from a Section 301 investigation on China during Trump’s first term have now lasted more than seven years.
Section 301’s durability does not give the president unlimited discretion, however. The law requires USTR to identify specific foreign acts, policies or practices and show that they burden or restrict U.S. commerce.
But Greta Peisch, who served as USTR’s general counsel during the Biden administration, said the central legal question under Section 301 is only whether the tariffs are an appropriate response to the foreign practices USTR identified.
“As long as USTR has set out justifications grounded in the investigations to support that finding, the fact that it is the same or similar levels as the IEEPA tariffs may not be such a damning piece of the story for them,” Peisch said.
Daniel Desrochers contributed to this report.