A three-judge panel at the Court of International Trade takes up whether Section 301 can carry a global tariff, eight months after the Supreme Court struck down the last one
WASHINGTON, September 30, 2026. The legal architecture holding up the United States tariff regime faces its most serious test since February when a three-judge panel of the Court of International Trade hears argument this week on whether Section 301 of the Trade Act of 1974 can be used to impose duties on goods from roughly 60 economies at once.
The case is the third major challenge to the administration’s tariff authority in eighteen months, and it is being brought in part by the same litigators who won the first. At stake are duties of 10 to 12.5 percent that have applied since July 24, 2026 to imports from a group of trading partners that, by the plaintiffs’ accounting, supplies 99.4 percent of American imports.
The hearing comes at an unusually consequential moment. The Supreme Court’s February decision striking down the president’s emergency tariff authority already triggered a refund process that CNN has valued at roughly $168 billion and that the Penn Wharton Budget Model estimated could reach $175 billion. A second adverse ruling, on the authority the administration turned to after the first one failed, would leave the tariff structure resting almost entirely on Section 232 national security actions and the largely untested Section 338 of the Smoot-Hawley Tariff Act.
What the tariffs are
The duties under challenge trace to an unusual set of proceedings the Office of the United States Trade Representative opened on March 12, 2026. Rather than investigating a single country’s practices, which is the conventional use of Section 301, USTR initiated 60 parallel investigations into what it characterized as trading partners’ failure to impose and effectively enforce prohibitions on the importation of goods produced with forced labor.
On June 2, 2026, USTR announced determinations and proposed action. It found that 54 economies had failed both to impose and to enforce such prohibitions, a list running from Algeria and Angola through Japan, Norway, Saudi Arabia, Switzerland, the United Kingdom and Vietnam. It found that six more, Canada, Ecuador, the European Union, Indonesia, Mexico and Pakistan, had prohibitions in place but failed to enforce them effectively.
The agency determined that these failures were “unreasonable” within the meaning of the statute because they undermine global efforts to eliminate forced labor, allow producers using forced labor to compete on an artificial cost advantage, reduce profitability for compliant firms and permit circumvention of existing import bans. It concluded the failures burden or restrict United States commerce by exposing domestic producers to unfair competition.
Ambassador Jamieson Greer framed the action in moral terms, saying that “the failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable” and that it creates unlevel global competition.
The proposed remedy was an additional duty of 10 percent for economies with forced labor import prohibitions, reciprocal trade agreements or partial regimes, and 12.5 percent for everyone else. A separate mechanism allowed reduced rates for certain apparel and textile imports.
USTR ran the statutory process. Nearly 60 witnesses testified at hearings beginning July 7, 2026, and the agency received roughly 500 comments and rebuttal comments. It finalized the action on July 23 and the duties took effect the following day.
The challenges
Two sets of plaintiffs are pressing the case.
The first suit was filed on July 24, 2026, the day the duties took effect, by the Liberty Justice Center on behalf of Burlap and Barrel, Inc., a spice importer, and Collective Horology, LLC, a small watch company. The case is captioned Burlap and Barrel, Inc. v. Greer and was brought as a class action, which the firm has said was deliberate so that relief would not be confined to importers with the resources to litigate.
The Liberty Justice Center is the same libertarian public interest firm that carried V.O.S. Selections to the Supreme Court and won. Jeffrey M. Schwab, the organization’s senior counsel and director of litigation, framed the new case as a continuation of the same argument: “For the third time, the administration has taken a limited tariff authority and attempted to stretch it into a worldwide taxing power.”
The complaint raises four principal defects. It argues that USTR failed to make the particularized findings about each foreign government’s conduct that Section 301 requires, that the agency did not establish the necessary connection between the conduct it identified and the tariffs it imposed, that it failed to demonstrate the duties are an “appropriate and feasible” response as the statute demands, and that the action is arbitrary and unlawful for want of reasoned explanation.
The remedy sought is a declaration that the tariffs are unlawful, an order preventing their enforcement, and refunds with interest for the plaintiffs and for all affected entries.
A second and parallel suit was filed on August 3, 2026 by 25 states, led by Oregon. Captioned State of Oregon v. Trump, Court No. 26-03467, the complaint is joined by Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, Washington and Wisconsin.
The states plead three counts. The first is that USTR exceeded its statutory authority, because Section 301 is directed at particular acts, policies or practices of specific countries rather than at a global condition addressed through near-universal action. The second is that the action is arbitrary and capricious, because the rates are not tied to the actual prevalence of forced labor in any given economy, because substantive comments went unanswered, and because no mechanism exists for a country to come into compliance and obtain relief. The third is that the action is ultra vires and intrudes on the tariff power the Constitution assigns to Congress in Article I, Section 8.
The states also seek vacatur, stays, injunctions and refunds with costs and fees.
The precedent problem
The administration’s difficulty is that the February decision was not narrow.
In the consolidated cases of Trump v. V.O.S. Selections, Inc. and Learning Resources, Inc. v. Trump, decided February 20, 2026, the Supreme Court held 6 to 3 that the International Emergency Economic Powers Act does not authorize the president to impose tariffs. Chief Justice John Roberts, writing for himself and Justices Neil Gorsuch and Amy Coney Barrett, applied the major questions doctrine, reasoning that an assertion of power with vast economic and political significance requires clear congressional authorization and that the statutory power to “regulate” importation is not the power to tax. Justices Elena Kagan, Sonia Sotomayor and Ketanji Brown Jackson reached the same result on the plain text without reaching the doctrine.
Section 301 is a materially different statute. It contains an explicit tariff remedy, it has been used to impose duties for decades, and it survived challenge in the earlier China tariff litigation. The administration’s position is that Congress plainly authorized what USTR did.
The plaintiffs’ response is that the authorization is bounded. Section 301 authorizes action against identified acts, policies or practices of a foreign country that are unjustifiable, unreasonable or discriminatory and that burden or restrict United States commerce. The statute contemplates an investigation of a country, a finding about that country, and a response calibrated to that country. What USTR did, on this reading, was start from a desired outcome, which was a broad global tariff, and construct 60 findings to reach it.
The near-uniformity of the rates is the plaintiffs’ best evidence. Economies with sharply different records on forced labor enforcement received rates separated by 2.5 percentage points. Norway and Bangladesh, Japan and Cambodia, Switzerland and Venezuela all landed within the same narrow band. The states argue that a remedy genuinely calibrated to country-specific conduct would not produce that distribution.
The administration’s timing gives the plaintiffs a further argument. The Section 301 duties took effect as Section 122 balance-of-payments tariffs, which are capped at 15 percent and expire automatically after 150 days, were running out. Officials have said the sequencing was intended to avoid the complexity of layering new duties on existing ones. Critics read the same facts as evidence that the legal authority was selected to fit a predetermined rate structure.
CNN reported that administration officials have defended the approach in general terms, saying the president “is going to always use the tools at his disposal to achieve his trade policy objectives.”
Scale and exposure
The duties at issue cover goods from 80 countries, including China, India and Japan, at rates between 10 and 12.5 percent, according to CNN’s account. The states put the coverage at 99.4 percent of United States imports by value.
That breadth cuts both ways in litigation. It supports the plaintiffs’ characterization of the action as a global tariff wearing a Section 301 costume. It also raises the stakes of an adverse ruling to a level courts are institutionally reluctant to reach without careful staging.
The refund exposure from the February ruling illustrates the problem. Penn Wharton put cumulative IEEPA collections at $164.7 billion through January 2026, with IEEPA duties accounting for 51.9 percent of all customs revenue by that month, up from 4.5 percent in February 2025. Collections were running at roughly $500 million a day. Customs and Border Protection is still working through the refund mechanics, with a third phase of its refund system scheduled to open October 6, 2026 and eligibility limited to companies with a case on file at the Court of International Trade and an importer of record number submitted by July 30.
A second wave of refunds on a comparable scale would compound an administrative process that has already proved slow and contested.
Where the case goes
The three-judge panel is expected to take weeks or months to rule. Whichever side loses will almost certainly appeal to the Court of Appeals for the Federal Circuit, and the Supreme Court is a realistic destination given the subject matter and the recent precedent.
That timeline has a practical consequence. By the time the case concludes, the tariff landscape may have moved again. USTR has several Section 301 proceedings in train, including an investigation into China’s implementation of the Phase One agreement expected to conclude this fall, an excess manufacturing capacity investigation covering 16 economies with determinations described as imminent, a Vietnam intellectual property investigation, and a Germany pharmaceutical pricing proceeding that held a hearing on September 22, 2026.
The administration has also demonstrated willingness to switch authorities. When IEEPA fell, it moved to Section 122, then to Section 301, and in the case of Canada to Section 338 of the Smoot-Hawley Tariff Act, which permits duties of up to 50 percent against discriminatory treatment and which had never been used before. CNN noted that 50 percent duties now apply to approximately $20 billion of Canadian goods under that authority. Section 338 contains no built-in expiration or review mechanism.
What importers should do
The litigation creates a specific and time-sensitive obligation for importers paying the forced labor duties.
The February refund process demonstrated that eligibility for relief can depend on procedural steps taken long before a ruling issues. CBP’s phased refund system limited early access to importers with a case already on file and an importer of record number submitted by a cutoff date. Importers who waited for the outcome before engaging found themselves in later queues.
The practical implications follow directly. Importers with material exposure to the Section 301 forced labor duties should evaluate whether to file a protective action at the Court of International Trade now rather than after a ruling. The class action structure of the Burlap and Barrel case may provide coverage, but reliance on a class that has not been certified is a risk rather than a plan.
Entry documentation should be preserved in a form that supports a refund claim, including the duty amounts attributable specifically to the Section 301 forced labor action as distinct from Section 232, Section 338 and ordinary most-favored-nation duties. Entries that liquidate reduce flexibility, and the statutory refund window runs from liquidation, so unliquidated entries and extension requests deserve attention.
Commercially, contracts that allocate tariff risk should be read for what happens if duties are refunded. Where an importer passed duty costs through to customers and later recovers them from the government, the question of who owns the refund is contractual and frequently unaddressed.
Pricing and sourcing decisions should not assume the duties will fall. The administration has replaced struck-down authorities twice, and a vacatur of the Section 301 action would more likely produce a substitute than a return to pre-2025 rates.
The constitutional question underneath
Beyond the specific statute lies the question the February decision raised and did not settle, which is how much of the tariff power Congress may effectively delegate.
The Court’s majority relied on the major questions doctrine to read IEEPA narrowly. Section 301 presents a harder version of the same question, because Congress did grant tariff authority explicitly. The issue is whether a grant of authority to respond to a particular country’s practices can be aggregated into a near-universal tariff by running 60 investigations in parallel and reaching materially identical results.
If the Court of International Trade accepts the plaintiffs’ framing, the ruling would constrain not only this action but the excess capacity determinations and other proceedings built on the same template. If it rejects that framing, Section 301 becomes a durable foundation for broad tariff policy, and the practical significance of the February decision shrinks considerably.
Either way, the ruling will shape how American importers plan for the remainder of the decade. For now, the duties are being collected, the entries are liquidating, and the clock on refund eligibility is running.
Economic context
The forced labor duties sit on top of a tariff structure already at historic levels. The Budget Lab at Yale, assessing the regime in April 2026, put the average effective United States tariff rate at 11.8 percent before consumer substitution, which it described as the highest since the early 1940s excluding 2025. It projected the rate would settle near 9.7 percent once Section 122 duties lapsed and pharmaceutical tariffs took effect.
Its household estimates put the annual cost of the tariff structure at between $760 and $940 in 2025 dollars, ranging from roughly $517 for the lowest income decile to about $2,175 for the highest. On the production side, the analysis found manufacturing output expanding 1.1 percent while construction contracted 2.5 percent and mining declined 1.0 percent, with the economy persistently about 0.1 percent smaller in the long run, equivalent to roughly $30 billion a year.
A 10 to 12.5 percentage point duty applied to nearly all imports is a substantial share of that burden. Vacatur would therefore register in macroeconomic data in a way the February ruling did, and would reopen the revenue question that the administration has answered twice by finding a new statute.
The forced labor policy underneath
Lost in the litigation is a policy question worth separating from the legal one. The United States has maintained a statutory ban on the importation of goods made with forced labor since 1930, strengthened substantially by the Uyghur Forced Labor Prevention Act, and enforcement through withhold release orders and detention has expanded considerably.
Most trading partners have weaker regimes. The European Union adopted a forced labor products regulation with a phased application timeline. Canada and Mexico took on commitments in the USMCA. Many of the 60 economies named have little enforcement infrastructure at all.
Whether that gap is best addressed through a uniform tariff is contested even among those who share the objective. Labor rights organizations have generally welcomed the attention while questioning whether an undifferentiated duty creates any incentive to reform, given that the action provides no pathway for a country to earn relief by improving enforcement. Importers who invested in supply chain traceability note that the tariff applies to compliant and non-compliant shipments alike, which dilutes the return on that investment.
That critique appears in the litigation as the arbitrary and capricious count, but it is ultimately a policy design argument. A remedy that cannot be escaped by compliance functions as a revenue measure rather than a behavioral one, which is close to what the plaintiffs are asking the court to find.
The Federal Circuit and the timetable
Procedurally, the Court of International Trade panel has several paths short of a merits ruling. It can consolidate the importer and state cases, sever the statutory authority question from the arbitrary and capricious counts, or rule narrowly on the adequacy of USTR’s explanation and remand for further proceedings without reaching the constitutional argument.
A remand would be the least disruptive outcome and, for that reason, a plausible one. It would leave the duties in place while directing the agency to supply the country-specific findings the plaintiffs say are missing. USTR would then have the opportunity to build a record that supports differentiated rates, which is what the statute appears to contemplate.
The plaintiffs would regard that as a partial victory with limited practical value, since the duties would continue to be collected throughout. It is also the outcome that would delay resolution longest, because a remand followed by a new determination followed by a new challenge could consume another year.
The Federal Circuit’s own recent handling of the IEEPA refund litigation offers a partial guide. That court cleared the way for refund proceedings to resume after a period of uncertainty, signaling that it intends to move the administrative consequences of the Supreme Court ruling forward rather than allowing them to stall. Importers reading that signal have generally concluded that procedural positioning pays and that waiting does not.
A note on the Canada track
Running parallel to the Section 301 litigation is the Section 338 action against Canada, which raises a distinct set of questions and which importers should not conflate with the forced labor duties.
Section 338 of the Smoot-Hawley Tariff Act permits duties of up to 50 percent in response to discriminatory treatment of American commerce. It had never been used before this year. Unlike Section 301, it contains no built-in expiration and no review process, which means duties imposed under it could remain indefinitely absent affirmative modification.
Those duties, now applied to roughly $20 billion of Canadian goods at 50 percent, drew Canadian counter-tariffs of up to 50 percent on approximately $27.6 billion of American products spanning steel, dairy, appliances, agricultural equipment, pulp and paper and electronics. The administration extended the action in September to outright import prohibitions on certain Canadian motor vehicles, dairy products and alcoholic beverages.
Whether Section 338 survives its own inevitable challenge is a separate question from the one before the panel this week. But the two proceedings share a common feature that the plaintiffs in both emphasize, which is an executive branch working through the statute book in search of authority broad enough to sustain a tariff policy that Congress has never voted on.