On August 3rd, 2026, a coalition of 25 U.S. states filed suit in the U.S. Court of International Trade (CIT) to challenge tariffs recently implemented by the Trump Administration. According to the complaint, the plaintiff states have filed suit to remedy financial harm resulting from the tariffs. The tariffs were levied under Section 301 of the Trade Act of 1974 against 60 nations. Now, the plaintiffs assert that these tariffs are unlawful and have called upon the CIT to block the tariffs and begin issuing refunds to the plaintiff-states. This article will discuss Section 301, the investigation leading to these tariffs, and the complaint.
Background
Section 301 of the 1974 Trade Act is intended to address “unfair” or “unreasonable” foreign trade policies and enforce international trade agreements. Section 301 may be invoked only in two specific circumstances. First, Section 301 applies when “the rights of the United States under any trade agreement are being denied.” 19 U.S.C. § 2411(a)(1)(A). Section 301 also applies when “an act, policy, or practice of a foreign country violates, or is inconsistent with, the provisions of, or otherwise denies benefits to the United States under, any trade agreement, or is unjustifiable and burdens or restricts United States commerce.” 19 U.S.C. § 2411(a)(B). An act, policy, or practice is considered “unjustifiable” if “the act, policy, or practice is in violation of, or inconsistent with, the international legal rights of the United States.” An investigation is required to determine whether Section 301 should apply in each situation.
All Section 301 investigations are conducted by the United States Trade Representative (USTR). The USTR can choose to initiate an investigation or act upon receiving a petition from a private party. Private parties are required to file a petition describing the unfair trade practice and how it harms the U.S. economy. After a petition is filed, the USTR is given 45 days to decide whether to initiate a formal investigation. When initiating any investigation, the USTR is required to publish a notice in the Federal Register. Generally, the investigation process will take about 12 months. However, that time frame can vary when investigating alleged trade agreement violations.
If the USTR finds through its investigation that a country has violated a trade agreement or otherwise implemented an act, policy, or practice that is unjustifiable, certain actions become available. One such action, and the subject of this complaint, is the implementation of tariffs. Under Section 301, the USTR may impose duties on a foreign country’s goods for “such time as the Trade Representative determines appropriate.” 19 U.S.C. § 2411(c)(B).
On March 12, 2026, the USTR announced that it was initiating a Section 301 investigation into the acts, policies, and practices of 60 countries. According to the notice published in the Federal Register, the investigation was related to “the failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor.” The USTR asserted that these investigations were initiated to “examine whether the failure of the various economies listed . . . to prohibit the importation of goods produced wholly or in part with forced labor is unreasonable or discriminatory and burdens or restricts U.S. commerce.” In a subsequent notice posted on June 5th, 2026, the USTR announced that it had determined that all 60 countries under investigation had acted “unreasonably” and burdened or restricted U.S. commerce.
Following this determination, the Trump Administration announced that tariffs would be imposed upon all 60 countries subject to the investigation. Tariff rates of 10% or 12.5% were levied against every subject country. Although certain goods were exempt, the majority of imported goods from the subject countries faced one of the two tariff rates. Of the 60 countries investigated, 41 faced a tariff rate of 12.5% with the remainder at 10%. Now, these tariffs face a legal challenge which could potentially render them void.
The Complaint
A lawsuit challenging the Section 301 tariffs was filed by a group of 25 plaintiff-states in the CIT. The states allege that the Section 301 tariffs are “contrary to Section 301’s statutorily constrained purpose.” The plaintiffs argue that the Section 301 tariffs as applied here violate the Trade Act of 1974. To implement tariffs under Section 301, the USTR is required to adhere to certain procedural requirements and ensure that any action taken complies with the limits set by the Trade Act. Here, the plaintiffs allege that the USTR has failed to satisfy certain of those procedural requirements under the Trade Act and that the challenged tariffs are not “appropriate” as is required by the Trade Act. For relief, the plaintiffs have requested the CIT to block enforcement of the tariffs, declare the tariffs unlawful, and issue refunds. The complaint requests refunds for the “plaintiff-states” but does not specify who should receive refunds beyond that.
In support of their claims, the plaintiffs first cite Section 303 of the Trade Act. Section 303 requires the Trade Representative to “request consultations with the foreign country concerned regarding the issues involved” upon the start of an investigation. 19 U.S.C. § 2413 (a)(1). Here, the plaintiffs allege that the USTR failed to engage in the required consultations with the countries under investigation. These consultations are a necessary step in the investigation process. By failing to engage in this consultation process, the plaintiffs argue that the challenged tariffs have failed to meet a basic procedural requirement of the Trade Act.
The majority of the plaintiffs’ claims tie into their assertion that the tariffs are not “appropriate” as is required by the Trade Act. Section 301 allows the USTR to take “appropriate and feasible action” following an investigation and final determination. 19 U.S.C. § 2411(b). To be “appropriate” under Section 301, the asserted action must be “one that can end or reverse the investigated conduct.” HTMX Indus. LLC v. United States, 156 F.4th 1236 (Fed. Cir. 2025). Further, tariffs imposed under Section 301 must be “tailored to achieve Section 301’s statutory goal of eliminating the investigated conduct.” Id. at 1253. Here, the plaintiffs assert that the Section 301 tariffs do not qualify as “appropriate” under the Trade Act because they are insufficiently tailored to combat the specific issue of forced labor.
According to the complaint, the “uniform manner” in which the Section 301 tariffs were applied is not sufficiently tailored, as it fails to account for the circumstances unique to each country under the investigation. The complaint notes that “the USTR recognized that 19 of the 60 economies investigated have prohibitions or commitments” on imported goods produced with forced labor. The plaintiff-states assert that despite the existence of these prohibitions, those 19 countries are treated similarly to the remaining 41 countries, which cannot be considered “appropriate.”
Next, the complaint notes that the Section 301 tariffs do not distinguish between types of goods. According to the complaint, the USTR fails to recognize the different risks associated with intermediate goods and unfinished goods. Finished goods are products that are ready for use or consumption, while intermediate goods are the raw materials or products necessary to produce other goods or services. The complaint cites witness testimony taken during the investigation which claimed that finished goods benefit more from lower forced labor standards than intermediate goods. Despite this testimony, the Section 301 tariffs are applied uniformly to both types of goods.
The plaintiffs also assert that the USTR has provided no justification for why these amounts are appropriate and that the tariff rates are merely an attempt to continue the Administration’s ongoing trade strategy. The plaintiffs point to tariffs enacted earlier this year under Section 122 of the Trade Act of 1974, which were set to expire around the time this current Section 301 investigation was announced. The plaintiffs argue that the Section 301 tariffs were not actually intended to combat forced labor, but merely to replace the Section 122 tariffs upon their statutorily required termination date. The plaintiffs support this claim by highlighting the similar rates between the tariffs and the timeline of the Section 301 investigation and tariff action.
For the timeline, the complaint points out that the entire process here, including the investigation and final determination, took less than three months. According to the complaint, “a Section 301 investigation into even a single economy takes much longer to complete.” The complaint then cites several examples of previous Section 301 investigations, ranging from eight months to a year. In those examples, a single nation was under investigation. The plaintiff-states argue that the process at issue here was “rushed” and “cursory.” The complaint claims that, “by conducting a pretextual, sham investigation into 60 economies at once, publishing a single Report, and in doing so in less than three months, the Tariff Action is outside the USTR’s authority.” For those reasons, the states claim that Section 301 tariffs violate the Trade Act.
Conclusion
This complaint marks another challenge to the Trump Administration’s tariff strategy. Earlier this year, the Supreme Court invalidated sweeping tariffs enacted under the International Emergency Economic Powers Act (IEEPA). Now, this complaint seeks the same outcome for Section 301 tariffs. Whether that relief will be granted remains to be seen, but regardless of the outcome this case will almost certainly garner heavy attention. To learn more about the Supreme Court’s decision to vacate the IEEPA tariffs, click here. To learn more about the refund process for the IEEPA tariffs, click here.