Twenty-five states ask a trade court to void the forced-labor tariffs

A coalition of 25 states has asked the U.S. Court of International Trade to strike down the Section 301 forced-labor tariffs that took effect on July 24, and to refund the duties collected under them. The suit, State of Oregon v. Trump, was filed on August 3 and is co-led by Oregon, Arizona and California, according to Supply Chain Dive. It targets the 10% and 12.5% duties that now apply to goods from 60 trading partners, the same regime that put Vietnam and China in the higher tier for furniture importers.

The duties remain in force while the case proceeds. Customs and Border Protection is still collecting them, and no court has paused that collection. The suit raises the chance that importers eventually get this money back, as they did with the IEEPA duties, rather than carry it as a permanent line on the landed-cost sheet.

What the states are arguing

The complaint runs three counts, per a summary from trade counsel Nakachi Eckhardt & Jacobson. The first says Section 301 of the Trade Act of 1974 authorizes action against particular practices of a particular foreign country, not a blanket duty on 60 economies that together supply 99.4% of what the United States imports. The second says the action is arbitrary and capricious under the Administrative Procedure Act: the U.S. Trade Representative set rates with no link to how prevalent forced labor is in each economy, kept a 10% floor even for countries that comply, offered no route for a country to get out from under the duty, and did not engage with the comments that contradicted it. The third says the tariff power belongs to Congress under Article I.

USTR opened the investigations on March 12, announced the action on July 23 and had the duties in place at 12:01 a.m. on July 24, a two-and-a-half-month run that is far shorter than a typical Section 301 case and that skipped the country-by-country consultations the statute contemplates. The Supreme Court struck down the IEEPA tariffs in February, the trade court voided the temporary Section 122 surcharge in May, and the Section 301 duties took effect the same day the Section 122 surcharge expired. The complaint cites that timeline as evidence of pretext: in the states' account, the forced-labor finding is a new legal label for duties the courts had already struck down.

A second case is already on the docket

The states are not the first plaintiffs. On July 24, the day the duties began, Burlap & Barrel, a New York spice importer, and Collective Horology, a California watch distributor, filed their own challenge through the Liberty Justice Center, arguing that USTR never identified the specific government practice it was punishing in each economy and that near-uniform rates across very different countries cannot be rational. That suit also asks for refunds with interest. Nakachi Eckhardt & Jacobson expects the court to consolidate the state and importer cases, and notes that a decision vacating the action would reach every importer that paid, whether or not it sued.

"After losing at the Supreme Court, the federal administration is again trying to raise taxes on families and businesses with another round of illegal tariffs," New York Attorney General Letitia James said in announcing the filing, as reported by Spectrum News. The White House defended the action. Spokesperson Kush Desai said the United States "is using its lawful authority to obtain the elimination of unreasonable acts, policies, and practices that burden U.S. commerce."

The defendants are the President, Trade Representative Jamieson Greer and CBP Commissioner Rodney Scott. The rate structure under challenge is the one importers have been paying since July: 10% on 17 economies, 12.5% on 38, with the EU, Taiwan, Japan, South Korea and Switzerland capped at most-favored-nation rates. Our earlier coverage of the tariff walks through the tiers and the exemption list.

Where the exposure sits for a furniture importer

Why it matters: For a furniture or home brand importing from Vietnam, China, Indonesia or India, this duty is 10 to 12.5 points of landed cost on nearly every container, and it stacks on the existing Section 301 China lists. The lawsuit does not remove it today. Both suits ask for refunds, and in the IEEPA refund round entry records, importer-of-record status and liquidation dates decided who got money back and how fast. Nakachi Eckhardt & Jacobson is telling clients to log entry dates and liquidation status now, and to consider protests where an entry is about to liquidate, rather than wait for a ruling. The upholstered furniture, cabinet and vanity lines already carrying the 25% Section 232 duty are exempt from this tariff, so the exposure here sits on casegoods, outdoor, ready-to-assemble and everything else outside that carve-out.

What it means for our partners: We treat the forced-labor duty as a cost that may come back: price it in now, and keep the entry records that would support a refund claim. Suppliers who import on their own entries should confirm they are importer of record and that their broker is tracking liquidation. Those who buy on delivered-duty-paid terms should ask who would hold the claim.