The Third Try: Why Your Section 301 Forced Labor Tariffs May Not Survive Court

On July 24, 2026, the government's third attempt at a global tariff took effect — 10-12.5% Section 301 duties on imports from 60 countries covering 99.4% of U.S. trade. Within hours, the same lawyers who killed the IEEPA tariffs filed suit. Here's what you need to do right now to protect your refund rights.

At 12:01 a.m. Eastern on July 24, Burlap & Barrel — a small New York spice company that sources single-origin products directly from smallholder farmers — was hit with a new 10% tariff on every shipment entering the United States. By lunchtime that same day, they'd become the lead plaintiff in a class-action lawsuit asking the U.S. Court of International Trade to throw the whole thing out.

This isn't the first time we've seen this movie. The administration's IEEPA tariffs were struck down by the Supreme Court on February 20, 2026. Their replacement — the Section 122 tariffs — were declared invalid by the Court of International Trade on May 7. Now the government is on attempt number three, and the legal team with a 2-0 record is back at the plate.

For importers, the question isn't whether to pay — you have to. The question is whether you'll be positioned to get that money back when the courts rule.

The Timeline: Three Tariffs in Five Months

Understanding how we got here matters because the courts will look at the pattern.

February 20, 2026: The Supreme Court rules in Learning Resources, Inc. v. Trump that IEEPA does not authorize presidential tariffs. The reciprocal tariffs — which had imposed duties of 10-145% on imports from virtually every trading partner — are invalidated overnight.

February 21, 2026: Within hours, President Trump signs a proclamation imposing a 10% tariff (later raised to 15%) under Section 122 of the Trade Act of 1974. Section 122 has a hard statutory limit: 150 days, no extensions without Congress.

March 12, 2026: Less than three weeks later, USTR initiates 60 separate Section 301 investigations into whether foreign economies effectively prohibit imports made with forced labor. The clock starts ticking on the replacement.

May 7, 2026: The Court of International Trade declares the Section 122 tariffs invalid.

July 24, 2026: The Section 122 tariffs expire at their 150-day statutory deadline. At 12:01 a.m. that same day, the new Section 301 forced labor tariffs take effect. Seamless transition — not a single day without a global tariff.

How the New Tariffs Work: Rates, Countries, and Exemptions

The USTR's final action covers 60 economies responsible for approximately 99.4% of U.S. imports. The duty structure breaks down into three tiers:

The net-of-MFN calculation works like this: if your product's existing Most Favored Nation (MFN) rate is already 8%, and your country is in the 10% cap tier, you pay only an additional 2% Section 301 duty to bring the total to 10%. If your MFN rate is already 10% or above, you pay zero Section 301 duty on that product.

These duties are additive — they stack on top of existing MFN rates, Section 232 duties (steel/aluminum at 25%), existing Section 301 China tariffs, and any applicable antidumping/countervailing duties.

Key Exemptions

Not everything is covered. The tariffs include specific carve-outs:

• USMCA-qualifying goods from Canada and Mexico entered duty-free under USMCA are fully exempt
• CAFTA-DR textile and apparel goods from six Central American and Caribbean nations are exempt
• Product-specific exclusions listed in Annex II of the USTR notice (certain pharmaceuticals, medical devices, and critical minerals)
• In-transit goods loaded onto a vessel before July 24 and entered for consumption before 12:01 a.m. on July 28 (HTS 9903.05.85)
• Section 232 covered articles — goods already subject to Section 232 tariffs are excluded to avoid double-stacking on the same legal authority theory

Critical HTS Subheadings to Know

The tariffs are administered through new HTS subheadings in Chapter 99:

• 9903.05.85 — In-transit savings clause (expired July 28)
• 9903.05.86 — Product-specific exclusions (Annex II, subdivision b)
• 9903.05.87 — Product-specific exclusions (Annex II, subdivision c)

If you're filing entries, your broker needs to report the correct Chapter 99 subheading alongside the underlying classification. Getting this wrong means either overpaying or triggering a CF-28 request for information.

The Legal Challenges: Two Lawsuits, One Strategy

Two separate lawsuits were filed in the U.S. Court of International Trade on July 24, 2026 — the same day the tariffs took effect.

Burlap & Barrel, Inc. v. Greer (Class Action)

Filed by the Liberty Justice Center — the same organization that won V.O.S. Selections v. Trump (the IEEPA case at the Supreme Court) and prevailed in the Section 122 challenge. The plaintiffs are:

• Burlap & Barrel — a New York spice importer sourcing from smallholder cooperatives
• Collective Horology — a California watch retailer importing from Swiss and European independent watchmakers

This is a proposed class action seeking to represent all importers affected by the tariffs. The relief requested: declaration that the tariffs are unlawful, an injunction against enforcement, and refunds of all duties paid, with interest.

The Legal Arguments

The complaint raises multiple grounds for invalidation:

1. Statutory overreach. Section 301 authorizes USTR to investigate whether a particular foreign government's act or practice is unreasonable and burdens U.S. commerce. The plaintiffs argue you can't simultaneously investigate 60 countries for the same generic practice and call each investigation "particular." The statute was designed for targeted trade disputes — not global tariff policy.

2. Pretextual use. The complaint alleges the forced labor rationale is a pretext. The tariffs replicate the same duty structure as the invalidated IEEPA and Section 122 tariffs. The administration allowed one global tariff to expire and immediately replaced it with another under a different statute. As Liberty Justice Center Chairman Sara Albrecht stated: "Changing the statute doesn't change the law."

3. Major questions doctrine. Imposing tariffs on 99.4% of U.S. imports — trillions of dollars in trade — is an action of such vast economic and political significance that it requires clear Congressional authorization. The plaintiffs argue Section 301 doesn't provide that.

4. Nondelegation doctrine. If Section 301 really does grant the President authority to impose tariffs on virtually all global trade based on a generic finding like "failure to enforce forced labor bans," then the statute delegates too much legislative power to the executive branch without an intelligible principle.

Why These Lawsuits Might Actually Win

This isn't wishful thinking. The track record speaks for itself:

The Liberty Justice Center is 2-0 against administration tariffs. The legal arguments here build directly on precedents established in those wins. The CIT has demonstrated willingness to move fast — the Section 122 case was decided in under three months.

But there's a critical difference: unlike IEEPA and Section 122, Section 301 has been upheld before. The Federal Circuit's 2025 decision in HMTX Industries LLC v. United States confirmed USTR's authority to modify Section 301 tariffs on China. The Supreme Court denied cert on June 15, 2026.

The government will argue this is just another Section 301 action. The plaintiffs will argue it's qualitatively different — 60 simultaneous investigations covering virtually all trade isn't "Section 301 as Congress intended."

What Importers Should Do Right Now

Whether or not the courts ultimately strike these tariffs down, your actions today determine whether you'll be eligible for refunds later.

1. Pay the tariffs — do not try to avoid them. CBP is collecting, and non-payment triggers penalties that won't be forgiven regardless of the lawsuit outcome. Evasion under the new Trade Fraud Enforcement Guide carries penalties of up to 4x the unpaid duties.

2. File protests on every entry. Under 19 U.S.C. § 1514, you have 180 days from the date of liquidation to file a protest with CBP. Protest on the grounds that the Section 301 forced labor tariffs are unlawful. This preserves your right to a refund if the court rules in importers' favor.

3. Consider joining the class action. The Burlap & Barrel suit is a proposed class action. If certified, class members would automatically be included. But class certification isn't guaranteed — having your own protest on file is insurance.

4. Document your USMCA and exemption claims. If you import from Canada or Mexico under USMCA, ensure your entries correctly claim the exemption. If your products fall under the Annex II exclusions, report the correct 9903.05.86 or 9903.05.87 subheading. Incorrect entries will result in overpayment.

5. Track the net-of-MFN calculation. If you source from the EU, Japan, South Korea, Switzerland, or Taiwan, the effective Section 301 rate depends on your product's underlying MFN rate. Products with MFN rates at or above the cap (10% or 12.5%) owe zero Section 301 duty. Run the math before assuming you owe the full rate.

6. Preserve transit documentation. If you had goods loaded before July 24 and entered before July 28, you qualify for the in-transit savings clause under HTS 9903.05.85. Keep the bill of lading, vessel manifest, and entry summary showing both dates.

What's Coming Next

The legal timeline will likely unfold quickly:

• August-September 2026: Government files its response. Plaintiffs may seek a preliminary injunction or expedited briefing.
• Q4 2026: Possible CIT decision if the court follows the pace of the Section 122 case (decided in ~75 days).
• 2027: Federal Circuit appeal, regardless of which side loses at CIT.

Meanwhile, watch for:

• USTR exclusion process — the notice mentions product-specific exclusions may be expanded. No timeline has been announced, but comments received during the July 7-9 hearing referenced over 1,600 written submissions.
• Textile TRQs — tariff-rate quotas for textiles and cotton from four trading partners are forthcoming but not yet finalized.
• Additional Section 301 investigations — USTR's separate "Excess Manufacturing Capacity" investigation (initiated simultaneously) has not yet produced final action. That could add another layer.

The Bigger Picture

In five months, importers have lived under three different global tariff regimes — IEEPA, Section 122, and now Section 301 forced labor — each imposed under a different legal authority after the previous one was invalidated. The Section 301 forced labor tariffs carry no statutory expiration date, which means they survive until either Congress acts or a court strikes them down.

The lawsuits are real, the legal team has a track record, and the arguments have teeth. But court cases take time, and in the meantime, you're paying 10-12.5% on virtually everything you import.

The importers who come out ahead will be the ones who paid the duties, filed their protests, and positioned themselves for refunds — not the ones who assumed either that the tariffs would last forever or that they'd disappear overnight.

TariffLens tracks Section 301 subheading requirements and flags entries that may qualify for exemptions or net-of-MFN reductions — helping you avoid overpaying while the legal battles play out.

This article is for informational purposes only and does not constitute legal, tax, or customs advice. Consult a licensed customs broker or trade attorney for guidance specific to your situation.