US lawyers challenge Trump's new 'forced labour' tariffs
Lawyers who secured a US Supreme Court ruling that President Donald Trump couldn’t use emergency powers to impose tariffs on imports have filed a fresh lawsuit against new tariffs imposed under different legislation.
The US has imposed the tariffs of between 10% and 12.5% on 80 countries under section 301 of the Trade Act of 1974, which penalises countries deemed to engage in forced labour or import goods made with forced labour. Trump is widely regarded as using the Act as a back-door mechanism to continue imposing tariffs after a temporary order expired.
Tariffs on goods including seafood from Norway and Chile, the world’s largest salmon producers and exporters, have risen from 10% to 12.5% under Section 301, while tolls on goods from the UK and the EU have remained at 10%. Salmon from Iceland, the Faroes, and Canada is tariff-free.
Back to court
Non-profit, non-partisan, public-interest litigation firm the Liberty Justice Center is the group that successfully challenged Trump’s use of the the International Emergency Powers Act (IEEPA) to impose presidential tariffs and is now taking the Trump administration to court again.
After losing the IEEPA case, the Trump administration switched to temporary Section 122 tariffs, which reached their statutory end at midnight on July 23. The new Section 301 duties took effect at 12.01 am on July 24, covering 80 countries that provide 99.4% of imports to the United States.
The new lawsuit by the Liberty Justice Center argues that the government cannot preserve a predetermined global tariff policy simply by moving from one statute to another. Section 301 permits action against particular foreign acts, policies or practices only after the US Trade Representative (USTR) makes the findings Congress required and selects an action designed to eliminate the identified practice.
Can't ignore the law
The lawsuit was filed on behalf of two American small businesses: Burlap & Barrel, a New York-based online retailer of single-origin spices sourced directly from smallholder farmers and producer cooperatives; and Collective Horology, a California retailer and distributor that supports independent watchmakers by introducing their watches - including those made by American, Swiss and other European craftspeople - to consumers throughout the US.
“Forced labour is morally indefensible, but an important objective does not give the government permission to ignore the law,” said Sara Albrecht, chairman and chief executive of the Liberty Justice Center.
“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.”
Near-uniform tariffs
The Center’s complaint alleges that the USTR acted arbitrarily and capriciously by imposing near-uniform tariffs across materially different economies without a reasoned, record-based explanation for how the tariffs would address the practices USTR identified.
The tariffs cover lawful imports with no demonstrated connection to forced labour, including products imported by American small businesses with transparent and responsible supply chains, say the lawyers. The complaint alleges that USTR failed to explain how taxing those products will cause foreign governments to change their import policies.
“Burlap & Barrel was built around transparent supply chains, direct sourcing and long-term relationships with farmers,” said Ethan Frisch, co-founder and co-chief executive of Burlap & Barrel. “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.”
Officials jumped the gun
The complaint also cites statements by senior administration officials that Section 301 would replace the tariffs invalidated under IEEPA and preserve substantially the same revenue. Some of those statements preceded Section 301 investigations into 60 of the countries that now face tariffs. The complaint alleges that the new tariffs were designed to preserve the structure and revenue of the administration’s invalidated IEEPA tariffs and expiring temporary tariffs - not as targeted remedies calculated to change particular foreign practices.
“This case is not about whether tariffs are wise economic policy,” Albrecht said. “It is about requiring the Executive Branch to follow the law Congress enacted.”
The lawsuit asks the Court of International Trade to declare the tariffs unlawful, prevent their enforcement and preserve the plaintiffs’ and proposed class members’ ability to obtain complete relief for all affected entries, including refunds of tariffs already paid, with interest.
