Importers sue over forced labor tariffs on 60 economies

The tariff wall never came down; instead, it changed statutes. At 12:01 a. m. Eastern on July 24, the exact minute the temporary Section 122 import surcharge lapsed, duties of 10 percent or 12. 5 percent took effect on goods from 60 economies under Section 301 of the Trade Act of 1974. Those economies account for roughly 99. 4% of U. S. imports by value.

Two lawsuits filed at the U. S. Court of International Trade that day call the forced labor tariffs the third unlawful version of one global tariff regime. This comes after the Supreme Court struck down the International Emergency Economic Powers Act tariffs in February and the Section 122 surcharge in May.

The importers suing are not forced labor apologists. Burlap & Barrel, the New York spice importer leading a proposed class action, buys only from suppliers that meet labor standards and pays smallholder farmers several times what they otherwise receive.

Learning Resources, the family-owned toy company that beat the IEEPA tariffs at the Supreme Court, states in its complaint that plaintiffs “in no way, shape, or form condone reliance on forced labor or forced-labor imports. But that is not the real issue here.”

In a twist of irony, a measure sold as an attack on exploitation in global supply chains appears to have landed first on the importers who built their businesses around avoiding it. What Changed at the Border Seventeen economies drew the 10 percent rate, including Canada, Mexico, India, Indonesia, Bangladesh and the United Kingdom.

This is because each has a forced labor import prohibition, a commitment to impose one under an Agreement on Reciprocal Trade, or a partial regime. Everyone else pays 12. 5 percent. Five economies got different math.

For the European Union and Taiwan, the duty works out to the higher of 10 percent or the most-favored-nation rate, so goods already dutied at 10 percent or above see no additional charge. Japan, South Korea and Switzerland get the same treatment at 12. 5 percent. The duty layers rather than replaces.

Covered goods still owe ordinary customs duties, antidumping and countervailing duties, and existing Section 301 duties, so Chinese and Brazilian goods now carry both. Section 232 goods are carved out entirely: steel, aluminum, copper, autos, auto parts and timber.

Canadian and Mexican goods entered free of duty under USMCA are exempt, as are CAFTA-DR textiles. That makes classification, not origin alone, the variable that decides exposure. The notice runs 431 pages, and most of it is exclusion lists. Foreign-trade zone users lost a lever.

Covered goods admitted to a zone may enter only under privileged foreign status, which fixes the duty as of admission rather than at entry for consumption. Goods parked in a zone will not escape the tariff if the rate later falls. One four-day grace period applied: goods already in transit before July 24 escaped the duty if entered by July 28.

Two pieces remain outstanding. USTR will set textile quotas for Bangladesh, Cambodia, Indonesia and Malaysia in a separate notice. The Core of the Lawsuits Section 301(b) lets USTR act only after finding that a specific practice of a specific country is unreasonable or discriminatory and burdens U. S.

commerce, and any response must aim at eliminating that practice. Both complaints argue USTR skipped the country-by-country work the statute demands. The timeline is their best evidence.

USTR opened 60 investigations on March 12, proposed action on June 5, and issued final determinations 133 days after initiation, against the seven-plus months it spent on a single China investigation in 2017 and 2018. One comment period and one three-day hearing covered all 60 economies.

“The third time’s not the charm,” the Learning Resources complaint declares in its opening paragraph. The Burlap & Barrel complaint alleges the sequence ran backward, that USTR “determined the tariff rates first,” calibrated them “to replicate the invalidated IEEPA rates,” and “assembled economy-specific findings afterward.”

Both cite Treasury Secretary Scott Bessent’s assurance that tariff revenue would stay virtually unchanged after the Supreme Court ruling. Both add a fallback: if Section 301 stretches this far, it is an unconstitutional delegation of Congress’s taxing power.

Ed Gresser, vice president at the Progressive Policy Institute and a former assistant USTR for trade policy and economics, told the Section 301 Committee the record cannot carry the weight. He estimated the action “will likely cost American goods buyers about $100 billion annually.”

Customs and Border Protection blocked an average of roughly $800 million a year over the last three fiscal years on suspicion of forced labor content.

“We do not see in the Report, in fact, any examples of shipments of goods verifiably made with the use of forced labor passing through customs and into consumer markets or production chains,” Gresser testified. Why the Duty May Survive Anyway USTR has a record to point to: two rou