U.S. Trade Court Hears Challenge to Trump's 10% and 12.5% Forced-Labor Tariffs on 60 Economies

Two Tiers, 60 Economies, One Question

On Sept. 30, 2026, three judges on the U.S. Court of International Trade sat in a Manhattan courtroom and listened to lawyers argue about something that sounds simple but isn't: can the president put a tariff on 99.4% of everything the U.S. imports, and call it a response to forced labor^[1][3][5]?

The tariffs are real and already being collected. They run 10% or 12.5%, depending on the country, and they took effect July 24, 2026^[6]. They cover 60 economies, including China and the 27-nation European Union, which together account for almost all U.S. import trade^[5]. The government says the reason is simple: these economies don't ban imports made with forced labor, or they have a ban but don't enforce it^[5][6].

The judges didn't rule. They took the case under advisement and gave no date for a written decision^[1][3]. But what happened in that courtroom matters, because this is the third time in 2026 that a broad, nearly universal Trump tariff has ended up in front of a court.

What the Law Was Built to Do, and What It's Being Asked to Do Now

To understand the fight, you need to understand the tool. Section 301 of the Trade Act of 1974 lets the U.S. Trade Representative investigate a specific foreign practice, decide if it's "unreasonable or discriminatory" and burdens U.S. commerce, and then impose tariffs in response^[4]. Historically, that meant one country, one investigation, one tariff.

USTR argues it did exactly that, just at scale. Starting March 12, 2026, it opened forced-labor investigations covering dozens of economies. By June 2 it had findings for 60 of them^[7][8]. It split them into two tiers: 54 economies with no forced-labor import ban at all, facing the higher 12.5% rate, and six — Canada, Ecuador, the EU, Indonesia, Mexico and Pakistan — with a ban that isn't well enforced, facing 10%^[7]. The government says those two tiers prove the findings were tailored to each economy, not a blanket label slapped on everyone^[7][8].

The challengers — four small businesses and, since Aug. 3, 25 Democratic-led states — see something different. Attorney Pratik Shah, representing the businesses, told the court "it's the lack of the country-specific findings" that breaks the law^[1][4]. Sorting 60 economies into two buckets isn't the individualized review Congress required, in their view. It's a global tariff wearing a narrower law's clothes^[1][4].

The Clause Nobody Applied

One detail from the hearing captures the whole dispute. Section 301 includes a line asking whether a practice is "not inconsistent with the level of economic development" of the country involved — a clause meant to give poorer nations some benefit of the doubt^[3][4]. The judges asked the Justice Department's Eric Hamilton why USTR never applied it. He said the clause simply didn't apply to this kind of finding^[4].

That answer either shows the law gives USTR room to work with, or shows the opposite — that USTR skipped a required step to make 60 different economies fit into two rate categories. The judges, described by multiple outlets as skeptical of the government on this point, didn't signal which reading they'd adopt^[2][3]. Notably, they also pushed back on parts of the challengers' argument that the whole thing is a pretext, which cuts against the idea that this was a one-sided hearing^[3].

That word — pretext — is doing a lot of work in this case, and it's worth pausing on why. The states' complaint calls forced labor a "pretext to continue its illegal tariff scheme"^[3]. That's a serious charge: it means accusing the administration of using a real problem as cover for a tariff policy the courts already rejected twice. The administration disputes this directly, saying its actions are "consistent with the text, object, and purpose of the Section 301 statute"^[3].

Why This Is the Third Try, Not the First

The pretext argument only makes sense with the backstory. On Feb. 20, 2026, the Supreme Court ruled 6-3 that a different law, the International Emergency Economic Powers Act, doesn't let a president impose tariffs at all^[23]. That same day, Trump tried a second route: a 10% global tariff under Section 122, a law that caps such tariffs at 15% and limits them to 150 days^[23]. In May, the trade court ruled those unlawful too, though the injunction only covered three specific plaintiffs, not all importers^[23][12].

Section 301 is attempt number three. It has a long track record of being used against single countries, which makes it sturdier ground than the laws that already failed^[23]. The new tariffs started at 12:01 a.m. on July 24, 2026, the exact moment the Section 122 duties expired^[6]. Treasury Secretary Scott Bessent and USTR's Jamieson Greer had both promised that rates would stay roughly the same through the transition^[10][6]. That timing, and those statements, are central to why the challengers call this a relabeled version of the tariff that was already struck down.

The small-business plaintiffs, backed by the libertarian-leaning Liberty Justice Center, frame this as a separation-of-powers fight more than a trade dispute. The Constitution gives Congress the power to tax, and Section 301 was meant to be a targeted tool, not a blank check^[11]. The group points to China's imports of Brazilian beef, which the administration cited as a forced-labor example, and then notes Brazilian beef got exempted from the tariffs anyway^[4]. The Liberty Justice Center already won the Supreme Court case against the IEEPA tariffs, and wants a precedent limiting presidential tariff power regardless of who holds the office^[11].

What Everyone Agrees Is Real, Even as They Disagree About the Law

Here's the thing both sides actually concede: forced labor in global supply chains is a documented, real problem. Nobody in this case argues otherwise. The dispute isn't about whether forced labor exists — it's narrowly about whether Section 301 lets USTR respond to it with tariffs covering almost all of U.S. trade, based on two tiers of findings rather than a deeper country-by-country record^[1][4].

Foreign governments named in the tariffs reject the label outright. China's foreign ministry spokesperson Mao Ning said "there is no such thing as 'forced labor' in China," calling the claim "a pretext for political manipulation"^[17]. The EU's Kaja Kallas pointed to European labor protections and paid vacation laws, saying the claim is "not really grounded"^[17][16]. Those governments have an obvious incentive here too: avoiding the label itself, and gaining leverage in their own trade talks with Washington. The EU, notably, got the lower 10% rate partly because it's close to finishing a separate trade framework with the U.S.^[17].

For the 25 states suing, the stakes are practical as well as legal. State agencies buy imported goods, and residents pay the pass-through costs on everyday purchases^[9]. There's also a political dimension — Democratic attorneys general challenging a signature Trump policy ahead of the midterms is itself a choice worth naming, without assuming it makes the legal argument wrong.

How the Coverage Split Before the Judges Even Spoke

The reporting on this hearing split in a telling way. Reuters and the Epoch Times ran flat, procedural accounts, attributing the pretext claim to the plaintiffs rather than asserting it^[1]. CNN's headline — "Trump's tariffs are back in court — again" — and the word "again" frame the case as a repeat offense before any argument is made^[13]. Nikkei Asia's "forced labor" in scare quotes signals doubt about the government's stated rationale in the headline itself^[18].

Notably, almost no mainstream right-leaning outlets covered the hearing at all. The loudest right-aligned voice is a plaintiff, the Liberty Justice Center, framing this around executive power limits rather than trade policy — not a traditional conservative defense of tariffs^[11]. The Hill's headline features the sympathetic small businesses but leaves out the 25 states, which would add a visibly partisan dimension to a story that's also about libertarian legal theory^[15].

Whichever way the trade court rules, an appeal to the U.S. Court of Appeals for the Federal Circuit is expected, and the Supreme Court could ultimately take it up again^[1]. If the government loses, refunds could follow — the IEEPA ruling already forced more than $100 billion back to importers^[13]. But the Section 122 precedent suggests relief might only reach the named plaintiffs, not every company paying the tariff^[12]. For now, the money keeps flowing in, and the courtroom's "under advisement" leaves open exactly how far importers can hold their breath.