The US Court of International Trade in New York heard a challenge on Wednesday to President Trump’s tariffs on goods from 60 trading partners he accuses of failing to prevent imports made with forced labor, a policy opponents say revives the unchecked tariff power the Supreme Court struck down in February. Four small businesses and 25 Democratic-led states argue the tariffs, which apply to goods from the EU and China among others, far exceed the president’s authority.
The third legal basis
Trump has made tariffs a central pillar of his foreign policy, using them as leverage to negotiate trade deals around the globe. The February 20 Supreme Court ruling in Learning Resources v. Trump held that the president cannot use emergency economic powers under the International Emergency Economic Powers Act to unilaterally impose tariffs on all US trading partners. The decision immediately invalidated the original tariff roster and triggered $168 billion worth of refunds for importers, the largest tariff repayment in US history.
Trump responded by immediately imposing a temporary 10 percent global tariff under a different statute. When those temporary tariffs expired, he invoked another legal authority, the forced labor tariffs now being challenged. Imposed in late July, they range from 10 to 12.5 percent and cover more than 99 percent of goods imported into the United States. In practical terms, almost nothing entering the country is exempt.
| Tariff wave | Legal basis | Status |
|---|---|---|
| Original global tariffs | IEEPA emergency powers | Struck down by Supreme Court, Feb 20, 2026 |
| Temporary 10% global tariff | Alternate statute | Expired |
| Forced labor tariffs, 10-12.5% | Forced labor authority | In effect, under challenge |
What the challengers argue
Three lawsuits, consolidated at the trade court, argue that the new tariffs require country-specific findings about unfair trade practices to be legally justified. Rather than conducting any real investigation into forced labor, the suits say, Trump is using the label as a pretext to revive a claim to unfettered global tariff power that US courts have repeatedly rejected.
The administration argues in court papers that it conducted real investigations into other nations’ failure to prevent imports of goods produced with forced labor, and concluded that tariffs were warranted for each of the 60 investigated trading partners. Critics note that the findings were produced within weeks, a pace that labor law experts say is hard to reconcile with the country-by-country analysis the statute contemplates. The plaintiffs include toy, apparel and hardware importers who say their margins cannot absorb a third restructuring of tariff planning in a single year.
A panel of three judges appointed by Presidents Trump, Barack Obama and Joe Biden heard the case. The panel is not expected to rule from the bench and will issue a written ruling at a later date. Either side can then appeal to the Federal Circuit, and the losers are likely to seek Supreme Court review given what is at stake.
Stakes for importers and markets
Importers have spent 2026 whipsawed. The February refunds forced companies to rebook costs, and many rebuilt supply chains on the assumption that broad presidential tariff power was off the table. The July tariffs reset that assumption, and a win for the administration at the trade court would cement a template: any statute touching trade can become a tariff vehicle if the findings are written broadly enough.
Markets have largely priced the litigation out. Stocks ended September resilient despite a bond selloff that pushed the 10-year Treasury yield above 5.2 percent, levels last seen before the 2008 financial crisis, with the S&P 500 closing Tuesday at 7,670.84. Traders see roughly even odds of a Federal Reserve rate hike next month, down from near certainty earlier in the week after New York Fed President John Williams cooled those bets. The tariff case is one more uncertainty on top of an inflation picture already complicated by oil prices near $90 for US crude and a diesel price above $6.50 a gallon.
Wednesday’s hearing also sits on a busy calendar. The same morning brought the August personal consumption expenditures report, the Fed’s preferred inflation gauge, along with the third estimate of second-quarter GDP and the ADP employment count. Any of those could move rate expectations more than the tariff hearing, which is one reason equity desks treated the court date as background noise rather than a catalyst.
The political frame
The political stakes matter as much as the legal ones. The 25 states joining the suit are nearly all led by Democrats, and the case will land in the middle of a midterm campaign where trade prices at the port and the grocery store are live issues. The plaintiffs’ small-business framing is deliberate: it puts a human face on tariff costs that the administration has sold as a burden borne by foreign exporters.
For the administration, a loss at the trade court would not end the tariffs immediately. Courts routinely allow contested policies to remain in effect during appeal, which means importers could face a year or more of paying tariffs that may later be refunded, as happened after February. That refund process itself took months and tied up customs brokers nationwide, and a second round of refunds on even larger collections would be far bigger.
Whatever the panel rules, an appeal is near certain, and the Supreme Court will likely get a second look at the boundaries of presidential trade power within a year. The February ruling left open which statutes the president can use, and this case will shape the answer.