US Trade Court Weighs Challenge to Trump's Forced-Labor Tariffs

The U.S. Court of International Trade in Manhattan heard arguments on Sept. 30 over tariffs of 10 to 12.5 percent that the Trump administration imposed on imports from 60 trading partners, including the European Union, China, the United Kingdom, Canada and Mexico, citing forced-labor concerns. The case, brought by four small businesses and 25 states, is the latest test of the administration's authority to levy global tariffs after the duties took effect on July 24.⁵⁶⁸²

Arguments in court

Pratik Shah, who represents the plaintiffs, asserted that President Trump overstepped the powers Congress granted him through the 1974 Trade Act's Section 301 provision when he imposed these duties, arguing that the administration was really pursuing goals unrelated to the forced-labor rationale it publicly cited. One judge on the panel asked Shah "So what?" in response to his argument about the administration's broader motives, according to the dossier's account of the hearing.⁵⁶

Eric Hamilton, representing the Department of Justice, told the panel that USTR was not held to a standard of absolute, or "metaphysical," certainty in showing that forced labor burdened U.S. commerce. commerce. He further conceded that a shared evidentiary basis supported the findings issued against each of the 60 economies affected by the tariffs. A Justice Department official said the agency had done its due diligence, and the department stated that USTR's actions were "consistent with the text, object, and purpose of the Section 301 statute."⁵⁶³

Over two and a half hours, the three-judge panel posed pointed, skeptical questions to attorneys from both sides. Judges indicated they planned to issue a written ruling as quickly as possible.⁵⁶⁷

Legal and investigative background

The tariffs were imposed under Section 301 following an investigation that, according to the dossier, found the administration had skipped legal requirements for country-specific findings even as the USTR said it had thoroughly evaluated forced-labor prevalence in international commerce. The administration maintains it conducted genuine investigations into forced labor across the 60 trading partners.²⁷⁸

The case follows a February ruling in which the Supreme Court struck down most of Trump's widest-ranging tariffs, a decision one account said forced the administration to refund more than $100 billion. According to CNBC, the Section 301 tariffs now in dispute apply 10 or 12.5 percent rates to goods from 86 countries, covering 99.4 percent of U.S. imports, and a separate measure under Section 122 — authorized to last 150 days — was also struck down by a federal trade court. Plaintiffs argue the forced-labor rationale was a pretext to reinstate the global tariff regime the Supreme Court had rejected, stating that "Defendants have now tried to re-create materially the same global tariff regime under three disparate statutes." Trump has said the Section 301 tariffs are "doing the same thing" as the earlier, invalidated duties. The New York Times reported that this marks the third time in under two years the administration has returned to court to defend its tariff authority, though this account remains single-sourced.³⁴

A second investigation looms

In March, the USTR opened a separate investigation into 16 global economies over allegations of industrial excess capacity, the results of which have not yet been released. Josh Teitelbaum, speaking at Sourcing Journal's annual Sourcing Summit, said the excess-capacity analysis is more complex than the forced-labor report, noting "Writing that report is a far more complex task than the forced labor report." He suggested political considerations could delay the outcome, asking rhetorically, "Is the president going to put on a 7.5-10 percent tariff four weeks before the midterm elections?" The dossier notes the tariffs are unpopular with consumers who will vote in November.⁵⁶

Ripple effects across the border

The broader trade tensions have had visible effects beyond the courtroom. NPR reported that hotels and tourism businesses in South Florida are experiencing fewer visitors from Canada, a shift the network tied to trade friction, a depreciated Canadian dollar and newly imposed border rules. Nonstop flights from Canada to Fort Lauderdale fell about 7 percent in the year beginning April 2025 and nearly 9 percent in the first half of 2026. A Snowbird Advisor survey of 4,000 members found a 12-percentage-point drop in those planning U.S. winter travel for 2025-2026, with the group noting rising interest in Central America and the Caribbean instead. Stephen Fine of Snowbird Advisor remarked that his organization is observing a growing number of snowbirds heading to Central America. We're also seeing growth in the Caribbean." One hotel operator, Richard Clavet, described the shift among Canadian guests, recalling a comment from one: "No, I'm not going in the U.S. anymore."¹