Section 301 forced-labor tariffs on 60 countries face legal challenge: what apparel sourcing teams need to know

This article is for informational purposes only and does not constitute legal, compliance, or sourcing advice. Verify certification and regulatory requirements with the relevant standards body or counsel.

Editorial note: Reported by The Sourcing Desk editorial team. We cross-reference claims against standards-body publications, regulatory filings, and primary sourcing data. Published 2026-07-29.

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The U.S. Trade Representative (USTR) activated new Section 301 tariffs of 10% or 12.5% on imports from roughly 60 trading partners on July 25, 2026, citing those countries' failure to maintain effective forced-labor regulations, and a legal challenge landed at the U.S. Court of International Trade the same day.

The lawsuit was filed by spice importer Burlap and Barrel and watch retailer Collective Horology. Their complaint, submitted to the Court of International Trade on July 25, calls for removal of the duties and payment of refunds. The two businesses argue the tariffs are "arbitrary and capricious" and function as a backdoor mechanism to reinstate levies that courts had already struck down. The case adds to a growing stack of trade-policy litigation that has shadowed the Trump administration since a February 2026 Supreme Court decision invalidated its earlier International Emergency Economic Powers Act (IEEPA) tariffs, including a 10% global baseline duty.

The timeline matters for context. After the Supreme Court ruling, the administration imposed temporary Section 122 tariffs, which carry a statutory 150-day ceiling unless extended by Congress. Those 150 days expired on July 25, the exact date the new Section 301 duties went live. The plaintiffs allege the rate structure is not coincidental: the Section 301 tariffs reproduce the same 10% baseline and country-specific additions that the IEEPA program had used, and the lawsuit contends the administration assembled supporting evidence after settling on the rates rather than deriving the rates from the investigation's findings.

USTR Jamieson Greer launched the forced-labor probe in March 2026, alongside a separate investigation into global manufacturing capacity. The forced-labor inquiry concluded in roughly three months. By comparison, the first Trump administration's Section 301 investigation into China's technology and intellectual property practices took more than twice as long. The plaintiffs argue the abbreviated timeline prevented any genuine country-by-country analysis of each nation's forced-labor laws or a specific rationale for how a tariff would improve enforcement abroad.

Alexander Schaefer, a partner at Crowell and Moring, told Supply Chain Dive that the government will need to convince the court "that the proportional relief to the alleged harm occasioned by each of the 60ish countries just happened to fall in the 10-12.5% range in every instance, which in turn just happened to be more or less the same rate heretofore deployed under Section 122," adding: "That strikes me as a pretty tough sell."

What this means for sourcing teams

Section 301 tariffs are live and collectible at the border today. Until the Court of International Trade issues a stay or a final ruling, importers must pay. Apparel sourcing teams should take the following steps now.

First, map your active country-of-origin exposure against the 60-country list published by the USTR. The 10% baseline applies broadly; the 12.5% rate applies to a subset of countries. Confirm with your customs broker which rate applies to each HTS code you import.

Second, review supplier contracts for tariff pass-through clauses. If your agreements are silent on new Section 301 duties, you may absorb costs that your supplier or freight forwarder will not share. Renegotiation windows are narrow once goods are in transit.

Third, document everything that could support a future refund claim if the court rules in the plaintiffs' favor. The Burlap and Barrel complaint explicitly seeks refunds, which means any importer who has paid these duties could potentially benefit from a favorable ruling. Customs counsel can advise on protest filing deadlines under 19 U.S.C. 1514, which are typically 180 days from liquidation.

Fourth, do not conflate these Section 301 duties with the Uyghur Forced Labor Prevention Act (UFLPA). The UFLPA is a separate statute that creates a rebuttable presumption that goods made wholly or in part in Xinjiang, China, are produced with forced labor and are therefore inadmissible. The new Section 301 tariffs are a financial penalty applied at the country level; they do not substitute for UFLPA compliance documentation, which remains a separate and parallel obligation for any goods with Chinese supply-chain exposure.

Fifth, if your sourcing footprint spans multiple countries on the 60-country list, consider whether nearshoring or country-of-origin shifts are financially viable. That calculation now has to account for the possibility that these tariffs are temporary pending litigation, not a permanent structural cost.

What changed

Section 301 of the Trade Act of 1974 gives the USTR authority to impose tariffs or other trade actions in response to foreign government acts, policies, or practices that are unreasonable or discriminatory and burden U.S. commerce. It has historically been used for targeted, investigation-backed actions, most visibly the China technology tariffs that began in 2018.

The current action is different in scope. Applying Section 301 simultaneously to roughly 60 countries on a single forced-labor rationale is without modern precedent. The USTR's position is that each country's failure to enforce forced-labor prohibitions constitutes an unreasonable policy that distorts U.S. commerce. The plaintiffs counter that Section 301 requires a country-specific determination, not a generalized global assertion, and that the statute cannot be used to impose what amounts to a universal baseline tariff under a different legal label.

The Court of International Trade has already shown willingness to check the administration's tariff authority. In May 2026, it ruled the Section 122 tariffs illegal, though that ruling is under appeal. The same court previously consolidated and heard the IEEPA challenges before they reached the Supreme Court.

Limitations and open questions

The litigation is at its earliest stage. No stay has been granted. The court has not set a hearing schedule as of publication. Sourcing teams should not assume the tariffs will be suspended quickly; the IEEPA cases took months to resolve even after consolidation.

The USTR's separate Section 301 investigation into global manufacturing capacity, launched in March alongside the forced-labor probe, has not yet concluded. If that investigation produces a second round of tariffs, the country and rate coverage could shift again, potentially overlapping with or compounding the forced-labor duties.

It is also unclear whether a favorable court ruling would automatically trigger refunds or require individual importer protests. Customs counsel familiar with Court of International Trade procedure should be consulted before assuming any automatic recovery mechanism.

The 60-country list has not been reproduced in full in this article. Sourcing teams should pull the USTR's Federal Register notice directly to confirm which countries and which HTS chapters are covered, as some product-specific exclusions were announced alongside the tariff action.

Finally, the broader manufacturing-capacity probe remains open. The USTR has not published a timeline for its conclusion, and the legal arguments that apply to the forced-labor tariffs may or may not apply to any duties that emerge from that separate investigation.

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This article is for informational purposes only and does not constitute legal, compliance, or sourcing advice. Verify certification and regulatory requirements with the relevant standards body or counsel.