The New York-based Court of International Trade on Wednesday heard arguments from counsel representing four small businesses and 25 states against sweeping 10-12.5 percent duties applied by the Trump administration to imports from 60 United States trading partners.
The duties were put in place following an investigation by the Office of the U.S. Trade Representative launched under Section 301 of the Trade Act of 1974, which alleged that dozens of economies failed to impose or adequately enforce bans on imports made with forced labor.
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On Wednesday, lawyers for the plaintiffs argued that President Donald Trump exceeded his authority in levying the tariffs, which took effect July 24. Among the countries impacted were China—a familiar target of Trump’s tariff aggression—as well as U.S. allies with trade agreements like the European Union, the United Kingdom, Canada and Mexico.
Pratik Shah, the attorney for two of the businesses that brought the suit against the president, emphasized that Trump had colored far outside the lines of his “carefully constrained” power to impose duties under Section 301.
Such probes usually target individual economies rather than blanketing dozens with the same justifications for investigation, and Shah argued that the administration’s need for speed (following the expiration of its global Section 122 duties in July) superseded its motivations and ability to fulfill the legal requirements that would justify new tariffs.
“If you’re going to do it at breakneck speed and try to cover the entire globe, you still have to satisfy the statutory requirements,” Shah said, according to Reuters.
According to other reports, the panel of three judges lobbed skeptical questions at both lawyers. CNBC reported that one justice asked Shah, “So what?” when he intimated that the government was pursuing objectives beyond the righting of wrongs related to forced labor with its tariff scheme.
Administration officials including Treasury Secretary Scott Bessent have indeed alluded in recent months to the Section 301 statute as a tool that would be used to rebuild the administration’s tariff strategy, which has suffered legal blows—most notably in the Supreme Court.
Meanwhile, Department of Justice Deputy Assistant Attorney General for the Federal Programs Branch of the Civil Division Eric Hamilton, who represented the government’s interests, said the USTR did its due diligence in evaluating the countries in question.
He said that the USTR’s burden of proof wasn’t “metaphysical certainty” that forced labor represented a burden on U.S. commerce, and that the government was within its rights to impose duties given the evidence it collected and the requirements of the Section 301 statute. He admitted that there was “a common basis for the determinations” that were made against all 60 economies that were targeted, though he insisted that they were investigated individually.
The hearing lasted two-and-a-half hours, and the judges noted that they planned to deliver a decision as speedily as possible. However, it’s unknown whether that could mean a period of weeks or even months.
While Section 301 has been characterized by administration officials like Bessent and USTR Ambassador Jamieson Greer as a more durable tariff authority than some of the others the administration has leveraged, it’s notable that the USTR hasn’t released the results of a second Section 301 investigation launched around the same time.
In March, the USTR announced it was investigating 16 global economies on allegations of industrial excess capacity, saying that these markets maintain manufacturing capabilities that exceed what they can consume domestically. This harms U.S. producers because the market is being flooded with a surplus of cheap goods that undercut locally made options, the USTR asserted.
There are several reasons that could be behind the USTR’s decision to delay the results of the investigation and the new tariffs that could come along with them, according to Josh Teitelbaum, trade and policy expert and senior counsel at Akin Gump Strauss Hauer & Feld LLP, who spoke at Sourcing Journal’s annual Sourcing Summit on Tuesday.
“Writing that report is a far more complex task than the forced labor report, which was essentially an on-off switch; does another country have a forced labor ban on the goods it’s imported into their country or not? Yes or no,” he said. “Excess capacity is a totally new concept the USTR is dealing with, and so you got to flesh this out and create a far more individualized analysis for each country.”
At some point, Teitelbaum said, it’s likely that “the political considerations took over.” Due to their propensity to drive up prices at retail, tariffs have become a supremely unpopular concept with consumers who will be voting in November.
“Is the president going to put on a 7.5-10 percent tariff four weeks before the midterm elections?” Teitelbaum asked. “I guess we’ll find out in four weeks.”
