Small Businesses Challenge Trump's New Tariffs in Court

London, United Kingdom Jul 25, 2026 ALN: Two small businesses have initiated legal proceedings against the Trump administration, contesting its recent imposition of tariffs aimed at addressing the issue of forced labor. This lawsuit, filed in the U.S. Court of International Trade, represents yet another chapter in the ongoing legal disputes surrounding President Donald Trump’s trade policies, which have often been characterized by their controversial nature and significant economic implications.

The core of the lawsuit revolves around the assertion that the administration has unlawfully employed Section 301 of the Trade Act of 1974 to impose tariffs ranging from 10 percent to 12.5 percent on products imported from 60 different economies, including major trading partners such as Canada, Mexico, and the European Union. These tariffs came into effect immediately, marking a shift from a temporary global surcharge of 10 percent that had been in place until its statutory window expired. This transition raises questions about the legality and justification of the new tariffs, particularly in light of the previous temporary measures.

The plaintiffs in this case, Burlap & Barrel, a spice importer based in New York, and Collective Horology, a watch retailer from California, contend that the Office of the U.S. Trade Representative (USTR) has failed to adequately demonstrate how the forced labor policies of the targeted economies impose a burden on U.S. commerce. Furthermore, they argue that the administration has not provided sufficient evidence to support the claim that these tariffs would effectively alter the labor practices of foreign governments. The legal representation for these businesses comes from the Liberty Justice Center, a libertarian public-interest law firm known for its successful challenges against previous tariffs imposed by the Trump administration, including a notable Supreme Court case.

Sara Albrecht, Chair and CEO of the Liberty Justice Center, emphasized the moral implications of forced labor while also highlighting the necessity for the government to adhere to legal frameworks. In a statement released to the public, she remarked, "Forced labor is morally indefensible, but an important objective does not give the government permission to ignore the law. The administration allowed one global tariff to expire and immediately replaced it with another under a different statute. Changing the statute doesn’t change the law. Every tariff authority has limits, and every administration must respect them." This statement underscores the broader legal and ethical dilemmas that arise when balancing economic policy with human rights concerns.

The Liberty Justice Center's legal team has a history of successfully challenging tariffs, including those that were imposed under the International Emergency Economic Powers Act (IEEPA) in 1977. They also secured a lower court ruling against the temporary surcharge that was implemented under Section 122 of the Trade Act of 1974, although that decision is currently under appeal. This history of legal victories lends credibility to the plaintiffs' case as they navigate the complexities of U.S. trade law.

Ethan Frisch, co-founder and co-CEO of Burlap & Barrel, expressed concern over the potential impact of these tariffs on American businesses and their supply chains. He stated, "These tariffs would punish a responsible American business, and the farmers we work with, without showing how taxes on our spices would address the policies of foreign governments that USTR says it is targeting." This perspective highlights the potential economic ramifications of the tariffs, particularly for small businesses that may not have the resources to absorb the costs associated with increased tariffs.

Moreover, the lawsuit raises questions regarding the legitimacy of the administration's process in implementing these tariffs. The plaintiffs argue that the similarity between the new duties and the tariffs previously imposed under IEEPA suggests that the administration had predetermined its tariff policy prior to completing the required Section 301 investigations. This assertion points to potential procedural violations and raises concerns about the transparency and accountability of the USTR's decision-making process.

In a parallel legal move, another group of businesses, led by Learning Resources, an educational products manufacturer, has also filed a lawsuit in the U.S. Court of International Trade, presenting similar arguments against the new tariff measures. This group is requesting that a three-judge panel hears their challenge, further illustrating the widespread discontent among businesses regarding the administration's trade policies. Learning Resources has previously been involved in legal challenges against Trump’s tariffs, including participation in the Supreme Court case that resulted in the overturning of the IEEPA tariffs.

The White House has not provided a response to requests for comment regarding these lawsuits, leaving many questions unanswered about the administration's stance on the legal challenges being mounted against its trade policies.

To understand the broader context of this legal battle, it is essential to consider the implications of Section 301 of the Trade Act of 1974. This provision has been viewed as a more legally robust authority for imposing tariffs compared to other measures utilized by the Trump administration. Notably, the tariffs that stemmed from a Section 301 investigation into China during Trump's first term have persisted for over seven years, underscoring the durability of this legal framework.

However, the use of Section 301 is not without its limitations. The law mandates that the USTR must identify specific foreign acts, policies, or practices and demonstrate how these actions burden or restrict U.S. commerce. This requirement raises the bar for the administration to justify its tariff decisions, necessitating a clear connection between the identified foreign practices and the economic impact on American businesses.

Greta Peisch, who served as general counsel for the USTR during the Biden administration, noted that the central legal question under Section 301 revolves around whether the tariffs constitute an appropriate response to the foreign practices identified by the USTR. She stated, "As long as USTR has set out justifications grounded in the investigations to support that finding, the fact that it is the same or similar levels as the IEEPA tariffs may not be such a damning piece of the story for them." This perspective suggests that the outcome of these legal challenges may hinge on the administration's ability to substantiate its claims and demonstrate compliance with the legal requirements set forth in the Trade Act of 1974.

In conclusion, the lawsuits filed by small businesses against the Trump administration's new tariffs not only highlight the ongoing tensions surrounding U.S. trade policy but also raise critical questions about the legal frameworks that govern such decisions. As these cases unfold, they will likely have significant implications for the future of trade relations between the United States and its key economic partners, as well as for the broader landscape of American businesses navigating the complexities of international trade.