Small businesses challenge Trump’s newest tariff regime in trade court

Small businesses are challenging the Trump administration’s newest tariffs in the U.S. Court of International Trade, opening another legal fight over import taxes that could affect retailers, importers and consumers nationwide.

The cases were filed in late July, shortly after the U.S. Trade Representative announced its final Section 301 action on July 23. They also followed the expiration of temporary Section 122 tariffs at 12:01 a.m. Eastern time on July 24. The new Section 301 duties remain in force unless a court or the administration changes their status.

What the lawsuits challenge

Educational toy company Learning Resources filed one of the cases with other small businesses. The company was also part of the earlier tariff litigation that led to the Supreme Court’s February 20, 2026, ruling on tariffs imposed under the International Emergency Economic Powers Act, or IEEPA.

A separate case was filed by Burlap and Barrel, a New York-based spice company, and Collective Horology, a watch retailer based in Ventura, California, according to the Associated Press.

The businesses argue that USTR did not adequately establish the required findings for each affected economy or explain how the tariffs would eliminate the practices identified in the investigations. Those are allegations in the lawsuits, not findings by the court.

USTR says the tariffs respond to what it describes as the failure of 60 economies to impose and effectively enforce prohibitions on imports made with forced labor. The agency says its process included written comments, public hearings and consultations with foreign governments.

How large the tariffs are

USTR set Section 301 duties at 10% for some investigated economies and 12.5% for others. For certain products from the European Union, Taiwan, Japan, South Korea and Switzerland, USTR described the rate as 10% or 12.5% net of the normal most-favored-nation tariff, depending on the product and applicable exemptions.

USTR says the action covers 99.4% of U.S. imports, subject to specified product exemptions. The agency lists exemptions for some raw materials, products that could cause broader economic disruption, goods unavailable in sufficient domestic quantities or at reasonable prices, and articles for which the duties would not substantially contribute to eliminating the practices identified in the investigations.

Why the Supreme Court case is different

The new lawsuits do not establish that the Supreme Court’s February ruling invalidated the Section 301 tariffs. The Supreme Court case addressed tariffs imposed under IEEPA, a different statute and legal authority.

The current cases concern Section 301 of the Trade Act of 1974. That law allows the government to respond to foreign acts, policies or practices that are found to be unreasonable or discriminatory and to burden or restrict U.S. commerce. The central legal question is therefore different: whether USTR followed Section 301’s investigation, finding and remedial requirements.

The earlier Court of International Trade case involving temporary Section 122 tariffs also concerned a different authority. The Section 122 duties were temporary and expired on July 24. The court cases over Section 301 will determine whether the newer tariff program complies with that statute; they do not yet determine the outcome.

What importers and consumers should watch

Tariffs are generally collected from importers. For a small company, an additional 10% or 12.5% duty can increase the landed cost of merchandise, require more cash before goods reach customers and complicate purchasing decisions. Retailers may absorb some of the expense, pass it through in prices, change suppliers or adjust product lines.

Consumers may see higher prices or slower product changes, but the effect will vary by product, country of origin, exemptions and whether an importer has other sourcing options. The lawsuits themselves do not establish that the tariffs are unlawful, and they do not guarantee refunds or an immediate halt to collection.

The next important signals will be government responses, motions for preliminary relief, court scheduling and any ruling on whether tariff collection can continue while the cases are pending. A separate lawsuit filed by 25 states on August 3 shows that litigation over the tariffs is expanding, but the small-business cases remain focused on whether USTR built a legally sufficient Section 301 record for the new duties.

Sources

• Associated Press: Trump’s tariffs face new court challenge from small businesses
• U.S. Trade Representative: Forced Labor Section 301 Investigations
• U.S. Court of International Trade: Slip Opinion 26-47