Court of International Trade Weighs Challenges to Trump-Era Forced Labor Tariffs

WASHINGTON, 1 OCTOBER 2026 —

U.S. Court Weighs Legal Challenge to Trump’s Global Forced Labor Tariffs as Businesses and States Push Back

The Court of International Trade in New York heard arguments on Wednesday from lawyers representing four small businesses and 25 U.S. states challenging President Donald Trump’s sweeping 10–12.5% tariffs on imports from 60 trading partners, imposed under Section 301 of the Trade Act of 1974. The duties, which took effect on July 24, target nations including China, the European Union, the United Kingdom, Canada, and Mexico—many of which are key U.S.

allies—on allegations of failing to enforce bans on forced labor in supply chains.

The legal battle marks a rare direct confrontation between the Trump administration and business interests over trade policy, with plaintiffs arguing that the tariffs exceed the president’s authority and were imposed with insufficient scrutiny. The case could reshape Washington’s approach to trade enforcement ahead of the November midterm elections, where tariffs remain deeply unpopular with consumers.

Lawyers for the plaintiffs, including Pratik Shah of two businesses suing the administration, contended that Trump overstepped his powers by applying the tariffs broadly rather than targeting specific violations. Shah emphasized that the U.S. Trade Representative (USTR) had abandoned the usual process of investigating individual economies, instead rushing to impose duties across 60 nations after the expiration of global Section 122 tariffs in July.

“If you’re going to do it at breakneck speed and try to cover the entire globe, you still have to satisfy the statutory requirements,” Shah said, according to Reuters.

The three-judge panel displayed skepticism during the two-and-a-half-hour hearing, with one justice pressing Shah on the broader implications of the tariffs beyond forced labor concerns. “So what?” the judge asked when Shah suggested the administration’s motives extended beyond addressing labor abuses. The exchange highlighted tensions between the administration’s stated goals—combating forced labor—and the economic disruptions the tariffs could trigger.

Defending the USTR’s actions, Eric Hamilton, Deputy Assistant Attorney General for the Department of Justice, argued that the trade representative had fulfilled its legal obligations. He rejected the idea that the government needed “metaphysical certainty” to prove forced labor harmed U.S. commerce, stating that the evidence collected met the requirements of Section 301. While acknowledging that the 60 targeted economies shared a “common basis” for the determinations, Hamilton insisted each had been evaluated individually.

The hearing follows a period of aggressive trade policy under Trump, which has faced legal setbacks, including a Supreme Court ruling against some tariff measures. The administration has increasingly relied on Section 301 as a tool to bypass congressional approval, though its effectiveness remains uncertain.

The USTR has yet to release findings from a second Section 301 investigation launched in March, which examined 16 economies for alleged industrial excess capacity—a more complex analysis than the forced labor probe.

Legal experts suggest political considerations may be delaying the excess capacity report. Josh Teitelbaum, a trade policy expert at Akin Gump Strauss Hauer & Feld LLP, noted that assessing excess capacity requires a far more detailed country-by-country review than the forced labor investigation, which relied on binary yes-or-no determinations about labor bans.

“Excess capacity is a totally new concept the USTR is dealing with,” Teitelbaum said, adding that political risks—such as imposing tariffs ahead of elections—could further complicate the process.

The timing of the Court of International Trade’s decision is unclear, though judges indicated they would rule as swiftly as possible. The outcome could influence not only the forced labor tariffs but also broader trade negotiations, including the U.S.-China “30-for-30” framework, where both sides agreed to reduce duties on $30 billion in imports. Meanwhile, the U.S.-India trade deal remains on the verge of completion, adding to the administration’s trade agenda.

For Malaysian and regional businesses, the case carries significant implications. As a major exporter of electronics, textiles, and palm oil—sectors vulnerable to U.S. tariffs—the outcome could determine whether Washington expands its trade restrictions beyond labor concerns. The legal challenge also underscores the risks of relying on Section 301, a tool that has drawn criticism for its lack of transparency and potential to disrupt global supply chains. With the U.S.

midterms approaching, the administration’s trade strategy may face further scrutiny, leaving exporters in Asia-Pacific on alert for new policy shifts.