The case places new tariffs imposed by the administration under review and could determine whether the duties remain in effect. It could also affect whether importers may seek refunds or other relief from costs associated with the tariffs.

What the states are challenging

In the lawsuit, the states describe the new tariffs as an attempt to replace earlier duties that had faced legal setbacks, according to the Associated Press. Their filing argues that the administration failed to establish the required connection between the conduct of each targeted economy and the tariff remedy imposed in response.

That argument focuses on Section 301, a provision of the Trade Act invoked by the administration to justify the measures. The states contend that using the statute requires findings tied to the specific country or economy affected by the tariff, rather than a broader rationale that does not establish that connection.

The states’ position is an allegation in ongoing litigation, not a judicial finding. The court has not, based on the approved reporting, ruled that the tariffs are invalid.

The administration’s separate Brazil action

The lawsuit follows a July 10 action by the Office of the U.S. Trade Representative. USTR announced a final Section 301 action imposing a 25% tariff on certain Brazilian goods.

USTR said the Brazil action followed public hearings, more than 360 comments and negotiations with Brazil. That administrative process is part of the background to the legal dispute, but the approved sources do not establish how the court will evaluate the action or whether the challenged tariffs will ultimately be upheld.

The case concerns federal trade authority exercised by the administration of President Donald Trump. The plaintiffs are state governments, while the challenged duties apply to imports entering the United States.

Why the case matters for importers

Tariffs are duties applied to goods entering the country. The lawsuit could affect businesses that import products covered by the challenged measures, including whether those duties can continue to be collected and whether importers have a path to seek refunds or other relief.

The dispute may also shape the administration’s ability to use Section 301 for similar tariff actions. If the court requires a more specific connection between a targeted economy’s conduct and the remedy, that could limit how the authority is used in future cases. The approved sources do not provide a ruling or a separate economic estimate of how the litigation would affect consumer prices.

For now, the filing does not itself cancel the tariffs. Importers and other businesses remain affected by the legal uncertainty while the case proceeds in the Court of International Trade.

What happens next

The next known step is continued litigation in the U.S. Court of International Trade. The approved reporting does not establish whether the court has ruled on emergency relief, so the immediate status of the duties remains uncertain.

The court will ultimately have to address the states’ challenge to the administration’s use of Section 301 and its country-specific findings. Until a ruling is issued, the states’ claims remain disputed and the tariffs should not be described as invalid.

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