US states sue Trump over forced labour tariffs

Twenty-five US states filed a lawsuit on Monday against President Donald Trump’s administration over tariffs imposed on dozens of trading partners, including the UK, at rates of between 10 per cent and 12.5 per cent.

The duties took effect in July and were imposed under Section 301 of the 1974 US Trade Act, legislation designed to target nations that use forced labour. The US says they were applied because trading partners, among them the UK, China and the European Union, failed to properly tackle forced labour.

The tariffs cover 99.4 per cent of US imports, according to the Office of the US Trade Representative, which set out its final action in the 60 investigations in July.

In a legal document seen by the BBC, the coalition of Democratic states said the decision was “arbitrary, capricious, and contrary to law.”

The lawsuit said the Trump administration “cannot use forced labour as a pretext to continue its illegal tariff scheme.”

“The tariffs the USTR imposed are so broad that they defy the USTR’s own stated aims and make a mockery of the statute used to justify them,” it said.

The states also contrasted the length of the two investigations. The last time Trump used Section 301 to impose tariffs, solely targeting China in 2018, officials had investigated claims of forced labour in the country for eight months, the lawsuit said. The most recent probe, which looked into 60 trading partners, took two months.

“Typically, a Section 301 investigation into even a single economy takes much longer to complete,” it argued.

White House spokesman Kush Desai said the US is “using its lawful authority” to address practices that burden American businesses. He said any foreign countries failing to deal with the importation of goods produced with forced labour was “unreasonable” and must be addressed.

“Section 301 tariffs have proven to be a legally durable tool since the president’s first term, and they remain so now,” Desai said.

During Trump’s first term, he used Section 301 to impose trade tariffs on China and they survived challenges in court.

New York Governor Kathy Hochul said: “President Trump’s illegal tariffs are nothing more than a tax on hardworking families.”

Oregon attorney general Dan Rayfield said in a statement: “Despite losing every step of the way, Trump is trying yet again to inflict more chaos on working families and homegrown Oregon businesses.

“We’re all paying the price for these unlawful tariffs, not foreign governments,” he added.

Several affected trading partners have expressed disappointment over the new tariffs, with the governments of Brazil and Japan separately calling the measures “unjustified”. China’s foreign ministry spokesperson Mao Ning described the tariffs as an “excuse for political manipulation”. Washington and Beijing have been locked in a tit-for-tat tariffs war which is currently on hold.

The UK duty comes on top of existing US trade measures that have reduced the value of British goods sold into the American market, and follows earlier Section 232 duties on steel and aluminium.

Some analysts have questioned how countries would be able to show that they had properly addressed the forced labour claims.

Alex Capri, a business lecturer at the National University of Singapore, has said that the lawsuit would pose a “formidable challenge” to Trump’s levies. He said there is a lack of credible evidence to back claims that countries have harmed US firms by violating forced labour rules.

Capri added that he expects “carve outs and walk-backs to gradually take the bite out of these tariffs”.

Jamie Young

Jamie Young is Senior Reporter at Business Matters, covering SME finance, employment law and Westminster policy since 2016. He has reported on every Budget and Autumn Statement since 2018, helped make sense of the ‘covid era’ and the bounce-back loan scheme from launch through the fraud investigations, and broke the magazine’s coverage of the 2024 late-payment reforms. He joined Business Matters straight from completing his BA in Administration from Exeter University and is NCTJ-qualified. Reach him at jyoung@cbmeg.co.uk