US small businesses file lawsuit challenging Trump’s new ‘forced labour’ tariffs

NEW YORK - Two US small businesses on July 24 challenged President Donald Trump’s latest round of tariffs on goods from 60 trading partners, saying that the new policy, like most of Trump’s previous tariffs, went beyond the president’s authority to tax imports.

The lawsuit, filed in the US trade court in New York, argues that the new tariffs require more detailed country-specific findings about “forced labour” to be legally justified.

The two small businesses, backed by a nonprofit legal group that successfully sued over previous rounds of tariffs, argued that the president is trying to re-impose tariffs that were already ruled illegal by the US Supreme Court.

The ​Trump administration on July 24 imposed new tariffs of 10 per cent and 12.5 per cent on 60 trading ‌partners, including the European Union, over allegations that they were not doing enough to stop the export of goods produced with forced labour.

The new tariffs took effect just as a temporary 10 per cent global tariff expired.

Trump has made tariffs ​a central pillar of his foreign policy, using ​them as ⁠leverage to negotiate trade deals around the globe. But the US Supreme Court ruled against most of Trump’s widest-ranging tariffs on Feb 20, finding that the International Emergency Economic Powers Act (IEEPA) does not authorise the president to unilaterally impose tariffs on trading partners.

Trump responded to that ruling by criticising the court and imposing a new and temporary 10 per cent global tariff under different legal authority. Those tariffs, like IEEPA tariffs, were also imposed under a section of the law that no previous president had used to impose tariffs, and they were also ruled illegal by the US trade court.

The Trump administration is appealing that ruling.

The July 24 tariffs were imposed under Section 301 of the Trade Act of 1974, which is meant to combat unfair or discriminatory economic practices by other nations.

Unlike IEEPA or the temporary global tariff authority, Section 301 has been used regularly by past presidents. But the states and small businesses said in their lawsuit that Section 301 tariffs have historically been targeted to address specific nations and industries, and Trump’s broad-brush approach has no historical precedent. REUTERS