Trump's Forced-Labor Tariffs Face First Class-Action Lawsuit as 25 Democratic States Say President Abused His Power

[Financial News] Twenty-five U.S. states led by Democratic governors, including New York and California, have filed a class-action lawsuit claiming that the Trump administration's 'forced-labor tariffs under Section 301 of the Trade Act of 1974' are illegal. It is the first major lawsuit to directly challenge the new tariff policy introduced to get around the reciprocal tariffs that the U.S. Supreme Court ruled illegal in February.
According to the United States Court of International Trade on the 3rd local time, the 25 states, including New York and California, asked the court to halt the tariffs imposed by the Trump administration on major trading partners under Section 301 of the Trade Act of 1974, arguing in their complaint that the measure exceeded presidential authority and was unlawful.
The plaintiffs said President Donald Trump and his administration unlawfully used Section 301 of the Trade Act of 1974 to effectively replace the reciprocal tariffs that were struck down by the U.S. Supreme Court.
In a statement, New York State Attorney General Letitia James criticized the move, saying, "No matter what rationale the Trump administration puts forward, the law and the Constitution do not give the president the authority to impose sweeping tariffs."
The lawsuit is drawing attention because it puts the Trump administration's tariff policy back into the courtroom.
Earlier, in February, the U.S. Supreme Court ruled that the reciprocal tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were illegal because they exceeded presidential authority.
The Trump administration then temporarily imposed a 10% global tariff on the world by applying Section 122 of the Trade Act of 1974, but that measure expired on the 24th of last month.
On the same day, the Office of the United States Trade Representative (USTR) announced a new tariff framework under Section 301 of the Trade Act of 1974, citing imports of products made with forced labor. As a result, major trading partners were hit with forced-labor tariffs of 10% to 12.5%, and South Korea was effectively included among those subject to the 12.5% rate.
The key issue in the lawsuit is expected to be whether the new tariffs are effectively a workaround that replaces the now-invalidated reciprocal tariffs.
Earlier, two small businesses, spice importer Burlap & Barrel and watch seller Collective Horology, also filed lawsuits to overturn the tariffs on the day the forced-labor tariffs took effect on the 24th of last month.
With Democratic state governments now joining the joint lawsuit, the Trump administration's new tariff policy is facing legal challenges from both businesses and local governments.
If the court sides with the plaintiffs, the ruling could have a significant impact on the validity of the forced-labor tariffs themselves.

[email protected] Kim Kyung-min Reporter