Section 301 Forced Labour Tariffs on 60 Economies Face a Court of International Trade Test After the IEEPA Ruling

On 30 September a three-judge panel of the Court of International Trade in New York heard the first major challenge to the tariffs that replaced the emergency tariffs struck down in February. The case, brought by importers including a spice company, Burlap & Barrel, and a watchmaker, Collective Horology, argues that the US Trade Representative stretched Section 301 of the Trade Act of 1974 beyond what Congress allowed.

The judges pressed the government on why USTR hadn’t considered the different development levels of the 60 economies covered. On 2 October the court ordered both sides to file more briefs answering its questions.

What the tariffs are

After the Supreme Court ruled on 20 February that the International Emergency Economic Powers Act doesn’t authorise tariffs, the administration put a temporary 10% global tariff in place under Section 122, which allows up to 150 days. It expired on 24 July. Congress didn’t extend it.

The replacement was ready. USTR had opened 60 investigations in March into whether trading partners’ failure to act against forced labour burdens US commerce. It found that it did, and from 24 July imposed tariffs on goods from all 60, which USTR says account for 99.4% of US imports.

The rates fall into tiers:

• 10% for 17 economies, including Canada, Mexico, India, Indonesia, Malaysia and the UK;
• a combined cap of 10% for the EU and Taiwan, and 12.5% for Japan, South Korea and Switzerland, matching their trade deals;
• 12.5% for 38 others, including China, Brazil, Vietnam, Australia, Israel, Saudi Arabia and the UAE.

For China the new tariff is added on top of the Section 301 tariffs from 2018 and 2019.

Goods covered by Section 232 national security tariffs are exempt, as are civil aircraft, patented drugs and 471 products added after public comment. Canadian and Mexican goods entering duty-free under the USMCA are exempt too. The structure of the Section 232 tariffs is in our post on that law.

The legal question

Section 301 has been used for decades against specific unfair practices, such as China’s technology transfer rules. It has no time limit and no rate ceiling. The challengers argue that it requires a link between a specific practice and the remedy, and that a tariff on all of a country’s goods for its general failure to police forced labour breaks that link. The government argues USTR has broad discretion once it finds a practice burdens US commerce.

The Court of International Trade ruled against the administration on the emergency tariffs in 2025 and on Section 122 in May 2026. The Supreme Court upheld it on IEEPA. A loss here would go to the Federal Circuit and possibly the Supreme Court again.

The money

The Committee for a Responsible Federal Budget estimates the 60-economy tariffs raise about $900 billion over ten years. With separate tariffs on Brazil and on Canada, the total comes to about $950 billion, which replaces less than 60% of the revenue lost when the emergency tariffs fell. Our tariff revenue post has how fiscal 2026 receipts ended up.

What to watch

The briefs come first, then a ruling, likely within months. A second Section 301 investigation, into “structural excess capacity” in 16 trading partners, is still open and could add tariffs on different grounds. If the court strikes down the forced labour tariffs, Section 232 would be left as the main legal basis, and it can only be applied sector by sector.