Small businesses are taking the federal government back to court. On July 24, 2026, two independent companies filed a lawsuit in the U.S. Court of International Trade against the Trump administration. Their target is the White House’s latest effort to slap 10% to 12.5% duties on goods imported from over 80 countries.
If this feels like legal deja vu, that’s because it is.
American importers spent the past year navigating an aggressive trade policy. First came global levies under the International Emergency Economic Powers Act (IEEPA). The Supreme Court struck those down in February 2026 in a landmark 6-3 decision. Next came temporary 10% duties under Section 122 of the Trade Act of 1974. Those expired on July 24 after facing their own judicial roadblocks.
Instead of stepping back, the administration immediately pivoted. Officials invoked Section 301 of the Trade Act of 1974, pointing to alleged forced labor practices across roughly 60 to 80 supply chains worldwide.
Small importers aren't buying the justification. They argue that stretching a statute meant for targeted trade abuses into a blanket global import tax stretches executive authority past its breaking point.
The Legal Game of Whack a Mole in Washington
When the Supreme Court ruled in Learning Resources, Inc. v. Trump that the president couldn't use emergency powers to impose unilateral tariffs, small importers celebrated. Many thought the trade wars would finally cool down.
That celebration didn't last long.
The White House shifted from emergency declarations to Section 122, an old balance-of-payments law that allowed short-term duties. When trade courts flagged problems with that approach, the administration reached into its legal toolkit once more. This time, it pulled out Section 301.
Section 301 is historically a surgical tool. In past decades, U.S. Trade Representatives used it to target specific unfair trade practices in specific nations after detailed investigations.
This new policy takes a fundamentally different route. It applies broad 10% to 12.5% duties across dozens of countries simultaneously.
Attorneys at the Liberty Justice Center, representing plaintiffs like spice importer Burlap & Barrel in Burlap and Barrel Inc. v. Greer, argue this approach violates statutory design. Section 301 requires country-specific findings and record-backed evidence. Applying a near-global tariff under the umbrella of forced labor, without distinct evidence for every affected jurisdiction, bypasses what Congress originally intended.
Why Big Corporations Can Pivot While Small Guys Suffer
Large multinational corporations have dedicated supply chain teams. They keep cash reserves on hand, negotiate bulk discount rates, and re-route sourcing through third-party hubs to minimize duty impacts.
Small businesses don't have those luxuries.
When a 10% or 12.5% tax hits a shipment at the port, a small owner must pay that tax up front before customs releases the container. Cash flow dries up instantly.
Consider how this plays out on the ground:
- E-commerce brands: Margins on consumer goods often hover between 15% and 25%. A fresh 12.5% import tax instantly wipes out more than half of a product's profitability unless prices jump right away.
- Specialty food importers: Spices, coffee, and specialty agricultural products cannot simply be resourced from domestic suppliers. If an origin nation gets hit with a tariff, the importer has to swallow the duty or risk priced-out customers.
- Niche manufacturers: Custom components imported for final domestic assembly face unexpected price hikes, making U.S.-assembled finished goods less competitive against foreign finished goods.
For months, small business owners have burned through cash reserves while waiting for federal refund processes from previously invalidated tariffs to move through Customs and Border Protection. Laying another wave of duties on top of ongoing refund delays puts many small importers in a severe financial strain.
What the Forced Labor Rationale Actually Means
The core argument from U.S. Trade Representative Jamieson Greer and administration officials rests on protecting American workers by cracking down on foreign forced labor.
It's a noble policy objective on paper. No business wants to support forced labor.
However, legal experts and trade analysts highlight a major disconnect in execution. Sweeping 80 different countries into a single tariff structure implies every one of those economies maintains systemic forced labor issues across all export sectors.
In testimony before Congress, administration officials acknowledged their underlying commitment to reindustrializing the U.S. economy and shrinking trade deficits. But using Section 301 as a general vehicle to maintain tariff levels previously negotiated under struck-down executive orders raises serious administrative law questions.
Under the Administrative Procedure Act, agencies must provide reasoned, evidence-based explanations for regulatory actions. Failing to produce granular, country-by-country findings leaves the new tariffs vulnerable in court.
How Importers Should Handle the Tariff Upheaval
Uncertainty is the biggest enemy of small business growth. Planning inventory, setting retail prices, or hiring staff becomes nearly impossible when import duties shift every few months.
If your company imports physical goods, don't wait for the Court of International Trade to hand down a final decision. Take action now to safeguard your operations.
File Formal Protests with Customs
Do not assume you will automatically receive a refund if these new Section 301 tariffs are struck down later. When paying duties under protest, ensure your customs broker files formal administrative protests with Customs and Border Protection within the statutory window. Document every dollar paid under the new levies.
Audit Supply Chain Classifications
Double-check your Harmonized Tariff Schedule (HTS) codes. Small errors in classification can accidentally push your goods into higher tariff brackets or subject them to duties they should otherwise avoid. Partner with an experienced customs attorney or licensed broker to review your entries.
Explore Duty Drawback and Bonded Warehouses
If you re-export goods or assemble components for international sale, investigate duty drawback programs to reclaim up to 99% of duties paid. Utilizing bonded warehouses can also help defer duty payments until products actually enter the domestic market, helping you preserve critical cash flow.
The legal battle over executive power and international trade policy won't resolve overnight. While Washington debates trade strategy, small businesses will continue carrying the immediate financial load. Keeping detailed records, challenging invalid assessments early, and preserving working capital remain the best ways to navigate the road ahead.
