US small businesses file lawsuit challenging Trump's new 'forced labor' tariffs
- By Reuters -
- Jul 25, 2026
NEW YORK: Two US small businesses on Friday challenged President Donald Trump’s latest round of tariffs on goods from 60 trading partners, saying that the new policy, like most of Trump’s previous tariffs, went beyond the president’s authority to tax imports.
The lawsuit, filed in the US Court of International Trade in New York, argues that the new tariffs require more detailed country-specific findings about unfair trade practices to be legally justified.
The two small businesses, backed by a nonprofit legal group that successfully sued over previous rounds of tariffs, argued that the president is trying to re-impose tariffs that were already ruled illegal by the US Supreme Court.
The Trump administration on Friday imposed new tariffs of 10% and 12.5% on 60 trading partners, including the European Union, over allegations that they were not doing enough to stop the export of goods produced with forced labor. The new tariffs took effect just as a temporary 10% global tariff expired.
The White House and US Trade Representative did not immediately respond to a request for comment.
Trump has made tariffs a central pillar of his foreign policy, using them as leverage to negotiate trade deals around the globe. But the US Supreme Court ruled against most of Trump’s widest-ranging tariffs on February 20, finding that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to unilaterally impose tariffs on trading partners.
Trump responded to that ruling by criticizing the court and imposing a new and temporary 10% global tariff under different legal authority. Those tariffs, like IEEPA tariffs, were also imposed under a section of the law that no previous president had used to impose tariffs, and they were also ruled illegal by the US trade court. The Trump administration is appealing that ruling.
Friday’s tariffs were imposed under Section 301 of the Trade Act of 1974, which is meant to combat unfair or discriminatory economic practices by other nations.
Unlike IEEPA or the temporary global tariff authority, Section 301 has been used regularly by past presidents.
But the small businesses said in their lawsuit that Section 301 tariffs have historically been targeted to address specific nations and industries, and Trump’s broad-brush approach has no historical precedent.
Jeffrey Schwab, an attorney at the Liberty Justice Center who represents the small businesses, said that Section 301 does not include any authority “to tax substantially all imports from substantially all countries at preestablished rates.”
The lawsuit asks the trade court to declare the tariffs unlawful, prevent their enforcement and preserve importers’ ability to receive refunds for any illegal tariffs.
The two businesses that filed the lawsuit are Burlap & Barrel, a spice importer that previously challenged Trump’s temporary 10% global tariff, and Collective Horology, a California watch retailer.
US states led by Democratic politicians had joined in the two previous legal challenges to Trump’s tariffs, and Oregon Attorney General Dan Rayfield said his state was considering options for a third lawsuit. The new tariffs will drive up costs for everyday Americans while doing nothing to combat forced labor overseas, Rayfield said.