Most trade laws were written to fix narrow problems, such as one country dumping cheap steel or another shutting out American farm goods. The case now before a federal court in New York asks what happens when a president takes one of those narrow tools and uses it to tax almost everything the country buys from abroad.
The three judges at the U.S. Court of International Trade heard today arguments over the Section 301 tariffs. The challengers include small businesses and 25 states led by Oregon, Arizona and California. To speed things up, the court chose a lawsuit brought by two educational toy makers, Learning Resources and hand2mind, as a sample case and paused the others until it rules.
Getting here took three attempts. In February, the Supreme Court struck down the sweeping tariffs Trump had imposed under an emergency powers law, and the government was forced to refund more than $100 billion. That same day, the President announced a 10% global tariff under Section 122 of the Trade Act of 1974, a law that caps such tariffs at 150 days. The trade court ruled against them in May, but an appeals court paused the decision, so the duties stayed in place until they expired.
The replacement arrived at the exact minute the old tariffs ended, 12:01 a.m. on July 24. Under Section 301, goods from 60 economies now face an extra 10% duty if the country bans imports made with forced labor and 12.5% if it does not. CNBC counts 86 countries, which together account for 99.4% of U.S. imports. Before acting, the Office of the U.S. Trade Representative ran an investigation that drew more than 1,600 written comments and three days of public hearings.
Section 301 itself dates back to the Nixon era. It lets the government respond when a specific foreign practice unfairly burdens American commerce, and Trump used it in his first term to put tariffs on Chinese goods. What makes this case unusual is the scale. Alan Wolff, the former Nixon administration lawyer who drafted the provision, told CNN he believes the current tariffs are illegal.
The challengers’ central argument is that forced labor is a cover story. In an August filing, they said the government has tried to rebuild essentially the same global tariffs under three different laws and reached for Section 301 only when nothing else was left. A group of trade experts made a similar point in a friend-of-the-court brief, describing the tariffs as a thinly veiled pretext. Trump may have helped their case himself. In July, he told Fox News the new tariffs were “doing the same thing” as the ones the Supreme Court threw out. Sara Albrecht, who leads the Liberty Justice Center, said those comments strengthened the lawsuit.
The Justice Department sees it differently. Its lawyers told the court in September that the trade representative followed the text and purpose of Section 301 at the president’s direction. In their view, the tariffs give foreign governments a clear reason to stop goods made with forced labor from moving through global trade, which protects American workers and producers from unfair competition. Few people defend forced labor, and U.S. law already bans such imports, so the government is pursuing a goal that is hard to argue against in principle.
No ruling had been issued as of today. Whichever side loses is likely to appeal, and the question could end up before the Supreme Court again. In the meantime, importers keep paying the duties. If the courts eventually strike them down, businesses may seek refunds, as they did after the February decision, although that outcome is far from certain. The administration also has a second set of Section 301 tariffs in the works, tied to countries with excess manufacturing capacity, which has not been finalized. Beneath the legal details sits a simple question that Congress addressed in 1974 and the courts must now interpret: how much tariff power did lawmakers actually hand to the president?
