Small businesses sue Trump over 12.5% Section 301 tariffs on 60 nations

Small businesses are suing to block Trump's new 10% to 12.5% tariffs on 60 economies, arguing the government illegally revived a strategy the Supreme Court already rejected. Two lawsuits contend the administration cannot use Section 301 to replicate tariffs invalidated in February.

"Forced labor in global supply chains is morally unacceptable, but a worthy goal does not give the government license to ignore the law," said Sara Albrecht, chief executive officer of the Liberty Justice Center, which represents the plaintiffs. The group is seeking class-action status to represent all importers affected by the new duties.

The plaintiffs — spice importer Burlap and Barrel Inc., watch retailer Collective Horology LLC, and educational toy makers Learning Resources Inc. and hand2mind Inc. — argue the US Trade Representative's investigation into forced labor relied on generalized claims about global supply chains rather than country-specific findings required under Section 301. The law typically demands the USTR identify specific foreign trade practices, demonstrate how they harm US commerce, and justify the tariff response. The administration's approach, the suits allege, amounts to "a wholesale effort to replicate the IEEPA tariff system that was declared unlawful."

The legal battle carries significant financial stakes. The US government collected about $166 billion under the now-invalidated IEEPA tariffs and has already paid out tens of billions in refunds, though the Justice Department continues to fight the scope of those repayments. If the courts limit the administration's ability to use Section 301 for broad tariff actions, it could constrain Trump's trade policy options and force a rethinking of how the US addresses forced labor concerns in global supply chains.

Section 301 Faces Legal Test on Scope of Authority

The core legal question is whether Section 301 — a law designed to target specific unfair trade practices by named countries — can support tariffs applied across about 60 economies simultaneously. The plaintiffs argue the USTR's investigation never identified which countries engage in forced labor, how those practices harm specific US industries, or why across-the-board tariffs are the appropriate remedy. The Liberty Justice Center said the case could set a precedent determining the outer bounds of presidential trade authority under existing statutes.

$166 Billion Refund Overhang From Prior Tariff Regime

The new legal challenge also revives attention to the unresolved aftermath of the IEEPA tariffs. After the Supreme Court ruled those tariffs unlawful in February, US Customs faced a flood of refund claims from importers who had paid duties since the program began. The government has disbursed tens of billions in repayments, according to court filings, but the Justice Department is appealing a ruling that would require refunds for all importers rather than only those who participated in the lawsuit. A separate adverse ruling on the Section 301 tariffs could compound the fiscal exposure.

The US Trade Representative's office has not commented on the litigation. The cases are Burlap and Barrel Inc. v. Greer and Learning Resources Inc. v. United States, both before the US Court of International Trade in New York.

This article is for informational purposes only and does not constitute investment advice.