Supplemental briefs filed at the Court of International Trade narrow the fight over USTR’s forced labor tariffs to a single statutory subsection and the question of who gets to challenge them
WASHINGTON, Oct. 22, 2026
The government and a group of US importers have filed the last round of written argument in the challenge to the Section 301 forced labor tariffs, and the filings have done something the oral argument in September did not. They have forced the United States Trade Representative to commit to a single statutory basis for a tariff program that currently reaches 99.4 percent of American imports by value.
In a brief filed Oct. 16 responding to questions from the three judge panel of the Court of International Trade, the government stated that “USTR relied on the definition of ‘unreasonable’ in Section 301(d)(3)(A).” Trade Law Daily reported the filing on Oct. 20 and Sobel Network Shipping summarized the exchange on Oct. 21.
That sentence matters more than its length suggests. At oral argument the previous month, government counsel had told the panel that USTR relied on neither subsection (d)(3)(A) nor subsection (d)(3)(B) of Section 301 of the Trade Act of 1974. The panel apparently found that answer unsatisfactory and asked for clarification in writing. The clarification picks (A), and in picking (A) the government has accepted the consequences that follow.
What the tariffs are
The measures under challenge took effect at 12:01 a.m. Eastern on July 24, 2026, applying to goods entered for consumption or withdrawn from warehouse for consumption on or after that moment. Goods already loaded on a vessel and in transit before that time were excluded if entered before 12:01 a.m. on July 28.
USTR announced the final action on July 23, 2026, following investigations initiated March 12, 2026 into 60 economies. The agency’s report concluded that 54 economies had failed to impose and effectively enforce a prohibition on the importation of goods made with forced labor, and that six economies had such a prohibition but failed to enforce it effectively. The six were Canada, Ecuador, the European Union, Indonesia, Mexico and Pakistan.
The resulting duties run at 10 percent or 12.5 percent depending on the economy. The 10 percent tier covers Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom. The 12.5 percent tier covers a longer list including Australia, Brazil, Chile, China, Colombia, Hong Kong, Israel, New Zealand, Nigeria, Norway, the Philippines, Russia, Saudi Arabia, Singapore, South Africa, Thailand, Türkiye, the United Arab Emirates and Vietnam.
Three jurisdictions received a different structure. For the European Union and Taiwan, the Section 301 duty tops up the MFN rate to 10 percent where the MFN rate is lower, and is zero where the MFN rate already meets or exceeds 10 percent. Japan, South Korea and Switzerland received the same structure with a 12.5 percent target.
Exemptions are extensive. Articles and parts already subject to Section 232 duties are excluded, as are USMCA qualifying duty free goods from Canada and Mexico, CAFTA-DR qualifying textile and apparel articles, informational materials, donations and accompanied baggage. USTR also carved out raw materials whose taxation could create domestic supply shortages, products capable of causing economy wide disruption, goods not sufficiently available from US or alternative sources, and products where exemption would itself encourage adoption of forced labor import prohibitions. That last category covers listed products from Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, the EU, Guatemala, Indonesia, Jordan, Malaysia, Switzerland, Taiwan and the UK.
USTR also indicated it would establish tariff rate quotas for textile and apparel goods from Bangladesh, Cambodia, Indonesia and Malaysia where feasible, allowing specified volumes based on US input content to enter free of the 10 percent duty, for an initial three year period. The 10 percent rate applies until those quotas exist.
The statutory fight
Section 301 authorizes USTR to act against a foreign country’s acts, policies or practices that are unjustifiable, unreasonable or discriminatory and that burden or restrict US commerce. Subsection (d)(3) defines “unreasonable.”
Subsection (d)(3)(A) is the general definition. It describes an act, policy or practice that, while not necessarily in violation of or inconsistent with US international legal rights, is otherwise unfair and inequitable.
Subsection (d)(3)(B) then lists specific practices that may be treated as unreasonable. Among them, at (B)(iii), is the denial of worker rights. And attached to (B) is a qualifier: in determining whether a practice described in (B)(iii) is unreasonable, USTR must take into account whether the country in question is taking steps consistent with its level of economic development.
The importers, led by Learning Resources, argue that this structure forecloses the government’s position. If USTR can reach labor practices through the general definition in (A), then the specific labor provision in (B)(iii) and its economic development qualifier serve no function. Under ordinary canons of statutory construction, a reading that renders a provision surplusage is disfavored. The plaintiffs put it directly: allowing (A) to cover worker rights practices makes (B) “surplusage.”
The government’s answer is that (B)(iii) does not cover what USTR actually found. Its position is that the development qualifier attaches only to practices described in (B), and that because USTR proceeded under (A), the qualifier does not apply.
The plaintiffs have a second argument on scope that runs in the opposite direction and is, in its way, more interesting. They contend that (B)(iii) could not have covered this conduct anyway, because the subsection addresses labor practices within a country’s own jurisdiction. What USTR penalized was something different: a country’s failure to block goods made with forced labor somewhere else from entering its own market. That is a border measure directed at third country production, not a domestic labor standard.
If the plaintiffs are right about that, it creates an awkward position for both sides. The government cannot use (B)(iii) because the conduct does not fit it. But the plaintiffs argue (B) is nonetheless exclusive for anything in the neighborhood of worker rights, which would mean the conduct is not reachable under Section 301’s unreasonableness prong at all.
The administrative law overlay
Running alongside the statutory question is an Administrative Procedure Act challenge that may prove easier for the court to resolve.
The plaintiffs argue that regardless of which subsection governs, USTR was required to consider the economic development status of the economies it tariffed, that it did not do so, and that the resulting determinations are therefore arbitrary and capricious. They argue the remedy is vacatur because USTR “wholly failed to consider” a factor Congress designated as relevant.
The government relies on the Federal Circuit’s 2025 decision in HMTX Industries, which addressed the scope of an agency’s obligation to respond to public comments. Under that decision, the government argues, USTR was required to address only significant comments, meaning comments raising points that would require a change in the agency’s decision if adopted. Because USTR concluded that economic development was not a relevant criterion under subsection (A), comments on the subject could not have compelled a different outcome, and so required no formal response.
The government further argues that even if the court finds USTR’s explanation inadequate, vacatur is the wrong remedy and the appropriate course would be a remand for further explanation. It also urges the court to find that, even if the reasoning is less clearly articulated than ideal, the agency’s path to subsection (A) can be reasonably discerned from the record, which under settled administrative law principles is sufficient.
That argument is doing significant work. The government is simultaneously asking the court to accept that USTR relied on (A), to infer that reliance from a record where counsel could not identify it at oral argument a month ago, and to hold that USTR’s failure to discuss economic development is immaterial because of the subsection it is now said to have relied upon.
Standing, and why it may decide the case
The final disputed issue is the narrowest and potentially the most consequential.
The government argues that the plaintiffs lack standing to challenge duties on economies from which they do not import. On that reading, each plaintiff may contest only the tariffs applied to goods it has documented importing, and the court’s review would be confined accordingly.
The plaintiffs respond that under the APA a challenger need not demonstrate injury from each component of an agency action, and that they may therefore challenge the determinations across all 60 economies.
The practical difference is enormous. A ruling for the plaintiffs that reaches all 60 economies would unwind a program covering effectively the entire US import base. A ruling for the plaintiffs confined to the specific origins from which Learning Resources and its co plaintiffs import would deliver relief to those parties and leave the structure intact for everyone else, requiring other importers to litigate separately.
Courts facing difficult merits questions have been known to find comfort in standing. A panel uneasy about the statutory question but unwilling to validate the full program has a middle path available here.
The refund problem
The remedy question sits underneath all of this, and importers should understand that winning and being paid are separate events.
The recent history is instructive. After the Supreme Court held in February 2026 that the International Emergency Economic Powers Act does not authorize tariffs, the refund process that followed favored parties already before the court. On Oct. 8, 2026, the Court of International Trade granted class certification in the Freestyle World matter, certifying a class of importers seeking reliquidation of entries without IEEPA duties. The court found numerosity satisfied from a pool of roughly 330,000 importers of record, of which the class comprises what the filings describe as some tens of thousands that actually paid the duties. Commonality was satisfied because the shared question is whether entries should be reliquidated without IEEPA duties, and because refund calculation is mechanical and formulaic.
Husch Blackwell attorneys Cortney Morgan, Nithya Nagarajan and Ruslan Klafehn noted that importers which have not filed their own actions will be bound by the outcome of the certified class, including any settlement, and that a settlement could reduce recoverable amounts. Their advice was that importers with substantial exposure should evaluate whether a separate suit is warranted rather than relying on class membership.
The same logic applies to the forced labor tariffs. If the CIT vacates or remands the determinations, the mechanism for returning money to importers will be a separate fight, and the parties positioned to recover first will be those with protective filings and preserved protests rather than those waiting for a general remedy.
What this means for importers
The case is fully briefed. A decision could come within weeks or could take months, and either outcome is likely to be appealed to the Federal Circuit. In the meantime the duties remain in force and must be paid.
Several actions are available now and are time sensitive.
Quantify the exposure by origin. The 2.5 point difference between the 10 percent and 12.5 percent tiers is not large enough to justify re sourcing, and companies should resist making supply chain decisions on that spread alone. But the exposure needs to be known, because it determines whether a protective filing is economically rational.
Preserve refund rights through protests. Entries that liquidate without a protest on the Section 301 forced labor duties are substantially harder to reach if the determinations are later vacated. The cost of a protest is small against a 10 or 12.5 percent duty on a material import volume.
Evaluate a separate action if exposure is significant. The Freestyle World experience shows that class membership delivers a share of whatever the class obtains, which may be reduced by settlement, and that it forecloses independent positions. Importers with large balances should take advice on whether to file their own case while the window remains open.
Verify exemption eligibility rather than assuming it. The exemption annexes are detailed and origin specific. Goods subject to Section 232 duties, USMCA qualifying goods from Canada and Mexico, and CAFTA-DR qualifying textiles are outside the program, and a number of listed products from thirteen named economies are carved out individually. A classification review that confirms exemption is worth more than a protest filed later.
Maintain records for the full pendency. Entry documentation, classification support and country of origin evidence for goods from the 60 investigated economies should be retained in a form that would support a refund claim, including supplier declarations and production records. Reliquidation claims fail on documentation more often than on law.
Watch the tariff rate quota process. For importers of textiles and apparel from Bangladesh, Cambodia, Indonesia and Malaysia, the establishment of the promised quotas would remove the 10 percent duty on qualifying volumes. Those quotas do not yet exist. Their publication would be a material change for that trade.
The larger stakes
This litigation is the second major test of whether the current tariff structure survives judicial review. The first, over IEEPA, ended with the Supreme Court holding the statute insufficient. Section 301 was the replacement vehicle, and the forced labor action was its broadest application: a single program reaching nearly all US imports, built on a practice based theory rather than country specific findings of the kind Section 301 has historically supported.
A separate challenge brought by 25 state attorneys general raises overlapping claims, including that the United States skipped required consultations and failed to address public comments. Section 122 tariffs were struck down at the trial level and remain in force under a Federal Circuit stay. The IEEPA refund process continues.
The supplemental briefs filed this month have at least clarified the terms. USTR says it acted under subsection (A). The importers say subsection (B) is exclusive and that USTR ignored a mandatory factor. The panel will decide which reading of a fifty year old statute governs a tariff program covering almost everything the United States buys from abroad.
How the case got here
The forced labor action did not emerge from a long standing trade grievance. It emerged from a legal vacuum.
In February 2026 the Supreme Court held that the International Emergency Economic Powers Act does not authorize the imposition of tariffs. That decision removed the legal foundation beneath a substantial share of the duties then in force and created an immediate problem for an administration that had built its trade policy on that authority. Section 301 of the Trade Act of 1974 was the most capacious remaining instrument, and the forced labor investigations initiated on March 12, 2026 were the vehicle for deploying it at scale.
The scale is the unusual feature. Section 301 has historically been used against specific foreign practices in specific countries, with a record built around that country’s conduct. The China investigations that produced the List 1 through List 4 tariffs, upheld by the Federal Circuit in litigation the government now cites, followed that pattern. The forced labor action did something structurally different. It applied a single uniform criterion, whether a country maintains and enforces a forced labor import prohibition, across 60 economies simultaneously, and sorted them into two tiers on that basis.
The sorting criterion is itself contested. Countries were tiered according to whether they have such a prohibition and how well they enforce it, not according to any measurement of forced labor actually present in the goods they export to the United States. A country with negligible forced labor in its export base but no import ban falls in the same category as one with substantial exposure. The plaintiffs have argued that this disconnect is what makes the determinations arbitrary: the practice USTR identified is a regulatory gap, and the burden it imposed falls on US importers of goods that may have no forced labor content at all.
The coverage figure USTR itself published, 99.4 percent of US imports by value, is the clearest expression of how far the theory extends. A trade remedy that reaches essentially all imports is difficult to describe as targeted at a particular foreign practice.
The stacking problem
For importers, one of the most consequential features of the program is how it interacts with duties already in place, and the interaction is not uniform.
The exemption for articles and parts subject to Section 232 duties means that steel, aluminum, copper and their derivative articles do not carry the forced labor duty on top. That is meaningful relief for metals intensive importers and reflects a deliberate choice to avoid compounding the national security tariffs.
Where no such exemption applies, the layers add. Brazilian goods illustrate the arithmetic. They face the 12.5 percent forced labor rate on top of a separate 25 percent Section 301 duty, producing a combined 37.5 percent before MFN duties are considered. If the forced labor layer is vacated, that falls to 25 percent. The difference is the entire margin on a great many product lines.
The EU, Taiwan, Japan, South Korea and Switzerland sit in a different position again. For those jurisdictions the Section 301 duty functions as a top up to a target level rather than an additive rate, meaning goods already carrying MFN duties at or above the target pay nothing additional. Importers from those origins should verify the MFN rate on each classification rather than assuming the duty applies, because for a meaningful share of tariff lines it does not.
This patchwork is why exposure quantification by classification and origin, rather than by supplier or by country, is the only reliable approach. Two products from the same vendor in the same shipment can carry entirely different forced labor treatment depending on their HTSUS classification and whether a Section 232 or USMCA exemption reaches them.
What a remand would actually mean
Much of the commentary on this case has framed the outcome as binary: the tariffs stand or they fall. The more likely intermediate result deserves attention, because it changes what importers should do now.
If the panel concludes that USTR’s explanation is inadequate but that the agency may have authority under subsection (A), the natural remedy is a remand for further explanation rather than vacatur. The government has explicitly asked for that outcome. On remand, USTR would produce a supplemented record addressing economic development or explaining why it is irrelevant, and the duties would in all likelihood remain in force throughout.
That scenario produces no refunds and no immediate relief, but it does not end the litigation either. It resets it. A supplemented determination is itself reviewable, and the plaintiffs would have a further opportunity to contest the adequacy of whatever USTR produces.
For importers, the implication is that protective filings and preserved protests retain their value under every outcome except a clean government win. A remand that eventually produces vacatur two years from now still requires that entries be reachable, and entries that liquidated unprotested in 2026 will not be.