President Donald Trump's latest tariff strategy is already headed to court.
Two small U.S. businesses on Friday sued the administration over its new "forced labor" tariffs on imports from 60 trading partners, arguing that the White House is once again stretching presidential trade powers beyond what Congress intended.
The lawsuit raises the question yet again for investors about whether the administration's latest tariff regime will prove durable enough for companies to base pricing, sourcing and investment decisions on.
The legal challenge comes just months after the Supreme Court ruled that the International Emergency Economic Powers Act doesn't authorize the president to impose broad tariffs. In response, the administration shifted to Section 301 of the Trade Act of 1974, arguing that widespread forced labor abroad constitutes an unfair trade practice warranting tariffs of 10% to 12.5%.
The plaintiffs, spice importer Burlap & Barrel and watch retailer Collective Horology, represented by the Liberty Justice Center, contend that Section 301 has historically been used to address specific unfair practices by individual countries, not to impose sweeping tariffs across dozens of trading partners.
For investors, the key question isn't simply whether the administration wins or loses.
Markets generally prefer predictable trade policy, even when tariffs are high. Repeated court challenges can make it difficult for companies to determine whether new duties will remain in place long enough to justify shifting suppliers or relocating production.
Many companies have already begun adjusting supply chains and pricing around the new duties. If courts eventually strike down the tariffs, businesses could again face uncertainty over sourcing decisions and potentially seek refunds on duties already paid.
Write to Evie Liu at evie.liu@barrons.com
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July 24, 2026 17:00 ET (21:00 GMT)
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