A federal trade court panel in Manhattan is hearing arguments challenging President Donald Trump's Section 301 tariffs, marking the third legal fight over his global tariff push in under two years. Challengers say the administration used a forced-labor investigation as a pretext to revive Trump's worldwide tariff regime.
A panel of three judges at the U.S. Court of International Trade in Manhattan opened arguments Wednesday from a group of small businesses and Democratic-led states challenging Trump's Section 301 tariffs. The challengers argue the tariffs overstep the law.
It's the third time in less than two years that courts have been asked to intervene against the president's push to impose sweeping tariffs on most U.S. imports.
A "pretext," challengers argue
The latest tariffs impose 10% or 12.5% rates on goods from 86 countries, covering 99.4% of U.S. imports. The Trump administration said it imposed the rates because the targeted countries failed to effectively enforce bans on trade in goods made with forced labor.
But an attorney for the challengers, Pratik Shah, told the panel that several factors show the government's justification was a pretext for reviving Trump's worldwide tariff regime. According to Shah: "We know this was not the only reason that they did this." One judge pushed back, asking whether the government having additional motivations was enough to rule against the tariffs.
Shah replied that the administration's use of Section 301 — imposing tariffs of similar size on dozens of economies in one move after a truncated investigation — does not satisfy the statute's requirements. He argued the government must show each country's trade practices are unreasonable and burden U.S. commerce, telling the panel it is the lack of country-specific findings that violates the statute. The hearing began at 10 a.m. ET, with the judges calling a short break around 11 a.m. ET.
Two prior tariff regimes already fell
The Trump administration started investigating foreign forced-labor practices in March, shortly after the president's protectionist agenda suffered a major legal setback. The Supreme Court struck down Trump's "reciprocal" tariffs in February, unwinding a large piece of his trade agenda and forcing the administration to refund more than $100 billion.
The day that ruling came down, Trump announced a worldwide 10% tariff under Section 122 of the Trade Act of 1974, an authority that only allowed the tariffs to last 150 days. The federal trade court ruled against those tariffs within that period, though an appeals court paused the ruling and let them stay in effect for their duration. Right as those tariffs expired in July, the administration imposed the new duties under Section 301 of the same 1974 trade law. A senior Trump administration official told reporters at the time that the move is the most sweeping international labor rights action the United States has ever taken.
Source: CNBC
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