A federal trade court panel pressed the Trump administration’s lawyers hard on Tuesday about the statutory foundation for duties that touch 99.4% of US imports — raising the prospect of a third consecutive judicial invalidation and a new round of refund obligations that could dwarf the $166 billion Americans are still recovering from after the last one.

The three-judge panel of the US Court of International Trade in Manhattan heard roughly two and a half hours of oral arguments on Tuesday, September 30, in In re: Section 301 Forced Labor Cases (No. 26-cv-3555) — the consolidated challenge to 10% and 12.5% tariffs that the Trump administration imposed on goods from 60 economies, covering 86 countries, after the Supreme Court struck down its earlier global tariff program in February. The panel, which includes Judges Jennifer Choe-Groves, Timothy Reif, and Lisa Wang, will issue a written ruling in the coming weeks. No ruling timeline was given.

The court said a written decision will follow.

Judges Ask: Which Part of Section 301 Are You Actually Using?

Section 301 of the Trade Act of 1974 authorizes the US Trade Representative to act against a foreign country’s “unreasonable or discriminatory” practices that “burden or restrict United States commerce.” The statute contains two definitional subsections spelling out what qualifies as “unreasonable” conduct by a trading partner, and the administration has proposed tariffs on all 60 economies under a separate broad-discretion provision instead.

Judge Timothy Reif emerged as the panel’s most persistent questioner. He repeatedly asked Justice Department attorney Eric Hamilton to identify the specific provision of the statute that US Trade Representative Jamieson Greer had actually relied on. When Hamilton acknowledged that the administration was not relying on either of Section 301’s two definitional subsections, Judge Reif asked directly whether that meant the administration was “ignoring” the framework Congress had erected — a charge Hamilton rejected, according to Bloomberg’s coverage of the hearing.

Hamilton told the court the administration interpreted the statute’s structure differently and that Greer had relied on a separate provision granting him broad discretion. He argued that a single comprehensive report with illustrative case studies was legally sufficient to establish the broader economic principles that applied across all 60 economies under review.

Judge Jennifer Choe-Groves was equally pointed. At one point during the hearing she remarked that there was “not a lot of depth” in the evidence the administration submitted to demonstrate how each of the 60 covered economies had contributed to forced-labor practices that burdened US commerce.

That observation carries legal weight that goes beyond factual inadequacy: unlike the two tariff programs that preceded this one — the IEEPA “emergency” tariffs and the Section 122 balance-of-payments tariffs — Section 301 tariffs are fully subject to judicial review under the Administrative Procedures Act’s “arbitrary and capricious” standard, which requires agencies to supply reasoned justifications for each factual finding.

“Pretext” Argument Meets a Skeptical “So What?”

Attorneys for the challengers — a coalition of small businesses led by Learning Resources, Inc. and a 25-state coalition led by Oregon — pressed a parallel theory: that the forced-labor justification is a pretext for reviving the near-universal tariffs the Supreme Court invalidated in February. The cases have been consolidated before the panel after the CIT selected Learning Resources as lead case.

Pratik Shah, lead attorney for the small-business plaintiffs, told the panel that a “constellation of factors” showed the forced-labor rationale was the administration’s pretext. Shah pointed to what he called an anomaly in the tariff architecture: USTR Greer cited China’s importation of beef from Brazil as one of its “case studies” demonstrating forced-labor supply chain failures — yet Brazilian beef was simultaneously exempted from the tariffs themselves, according to Bloomberg’s September 30 hearing account.

Shah argued that the administration’s use of Section 301 in this case was “unprecedented” — imposing tariffs of roughly similar size on dozens of economies “in one fell swoop” after a roughly four-month investigation, compared with the targeted, country-specific investigations that have characterized Section 301 practice over the statute’s fifty-year history.

The pretext argument did not go unchallenged. “So what?” Judge Lisa Wang asked at one point, pressing Shah on how much weight the court could give presidential public statements when Greer had provided on-the-record justifications for the tariff in his formal determination. Shah replied that the statements reinforced, even if they didn’t independently establish, the challengers’ argument that the administrative record was too thin to survive APA review.

Who Actually Pays These Tariffs

For US importers and the consumers they supply, the outcome of this litigation is measurable in dollars already spent. A February 2026 study by economists at the Federal Reserve Bank of New York found that close to 90% of the economic burden from Trump-era tariffs fell on US firms and consumers rather than on foreign exporters, according to the NY Fed study.

In the first eight months of 2025, US importers and consumers absorbed 94% of the tariff costs. From September to October that share stood at 92%, and in November at 86%. Foreign exporters absorbed the remainder — typically by reducing their prices only about 0.6 percentage points for every 10% tariff imposed.

Rick Woldenberg, CEO of Learning Resources — the educational toy maker whose case was chosen by the Court of International Trade as the primary test vehicle — was present at Tuesday’s hearing. Afterward he told reporters he was reluctant to predict the outcome but was glad the core issues were getting a thorough examination.

“The part that I think is the scary part is the wrong idea that rule of law means whatever you want it to mean,” Woldenberg told reporters after the hearing.

Third Attempt, Third Legal Wall

Tuesday’s hearing is the latest chapter in a legal saga that has now spanned three separate tariff programs and three distinct statutory authorities.

The first program — the IEEPA “reciprocal tariffs” imposed starting April 2025 — was struck down by the Supreme Court on February 20, 2026, in Learning Resources, Inc. v. Trump. The ruling compelled the US government to refund more than $166 billion it had collected; as of August 2026, approximately $100 billion had been returned to importers, according to PIIE’s tariff refund analysis, with billions still pending.

Within days of that ruling the administration pivoted to Section 122 of the same 1974 Trade Act, imposing a flat 10% levy on a balance-of-payments rationale. The Court of International Trade rejected that theory in May 2026, though an appeals court allowed the Section 122 tariffs to remain in place during the litigation. Those duties expired by statute on July 24, 2026 — the same day the Section 301 forced-labor tariffs took effect, with USTR Greer having launched the 60-economy investigations in March 2026 and completed them in July, per the court’s scheduling notice.

The forced-labor tariffs differ from both prior programs in one legally significant way: Section 301 has survived court challenges before — most prominently the litigation over China-specific tariffs imposed during Trump’s first term. But those earlier challenges involved targeted, country-specific actions of the kind Section 301 was designed to support. Applying the statute to cover 99.4% of all US imports at once, based on a four-month investigation, is what two sets of former trade officials say crosses the line from discretion into overreach. The CIT chose Learning Resources as lead vehicle on August 19, 2026.

The Officials Who Wrote Section 301 Say It Doesn’t Support This

In amicus briefs filed in mid-September, former US Trade Representative Carla A. Hills (who administered Section 301 under President George H.W. Bush), former WTO Deputy Director-General Alan Wm. Wolff (who served as USTR General Counsel during the statute’s formative period), and former USTR General Counsel Warren Maruyama urged the panel to set aside the tariffs, according to the Liberty Justice Center’s amicus filing report.

“Section 301 is an important trade-remedy law, but it is not a blank check for worldwide tariffs or a substitute for the IEEPA tariffs the Supreme Court struck down,” the Wolff-Hills-Maruyama brief stated, per the Liberty Justice Center’s announcement of the September 14 filings.

In a Peterson Institute analysis published in August, Wolff and his co-authors expanded on the argument: consistent US practice over the fifty-year history of Section 301 has never included any attempt by any president or USTR to impose a blanket tariff on countries accounting for nearly all of US trade in place of tariffs set by means approved by Congress in legislation. Applying the statute that way, they argued, would effectively transfer Congress’s constitutional tariff-setting authority to the executive branch — a transfer the Constitution does not permit.

The Cato Institute’s Levy Center for Constitutional Studies filed a separate amicus brief on September 11, arguing that if the administration’s reading of Section 301 were correct, the USTR could “impose unlimited tariffs on virtually any imports from any country at any time” — a scope of authority the brief says is constitutionally impermissible under the Supreme Court’s major questions doctrine, which requires clear congressional authorization for claims of sweeping economic power.

Does Section 301 Have a Math Problem?

A further line of attack in the challenger briefs goes to the relationship between the tariff rates and the stated harm they are supposed to remedy. Peterson Institute economists calculated that a tariff proportionate to the economic burden that forced labor actually places on US commerce would be between 0.23% and 0.84% — not 10% to 12.5%, according to a PIIE policy brief on tariff proportionality.

The Cato Institute analysis found the proposed tariff revenue exceeds the estimated economic harm from forced labor by more than 30 times.

The administration’s two-tier rate structure — 10% for economies that have made commitments to enforce forced-labor bans, 12.5% for the rest — also applies uniform rates regardless of the severity of individual countries’ failures, and countries with US-equivalent forced-labor policies still received tariffs. Under APA review, that kind of mismatch between stated rationale and actual tariff design is exactly what “arbitrary and capricious” review is designed to catch, as legal analysts have noted.

What Comes Next — and Why the Stakes Extend Beyond These Tariffs

The Court of International Trade will issue a written ruling within weeks. Any decision will almost certainly be appealed — either by the administration if it loses or by the challengers if it doesn’t — to the Court of Appeals for the Federal Circuit. Given the sweeping economic scope and the constitutional questions the case raises about the separation of powers over trade, a further appeal to the Supreme Court appears likely regardless of how the lower courts rule.

A secondary question the judges pressed both sides on: if the court finds the evidentiary record inadequate, should it remand the matter to Greer and let him fill the gaps, or rule on the underlying legal questions now? Challengers urged the latter, arguing that a remand would leave the fundamental statutory dispute unresolved and keep US importers in a state of prolonged uncertainty, per Bloomberg’s post-hearing coverage.

What is at stake beyond the immediate tariff question is a constitutional principle with long-term implications. The major questions doctrine — under which the Supreme Court now requires explicit congressional authorization for claims of sweeping economic power — would likely doom these tariffs at the Supreme Court even if the lower courts sustain them, according to Peterson Institute economists Wolff and Maruyama.

If the courts agree, the ruling will not merely force another round of refunds. It will establish a precedent — applicable to any future administration of either party — that Congress must specifically and explicitly authorize near-universal tariff power. No specialized trade statute drafted for selective, targeted remedies will suffice.

For the US importers who, per the Federal Reserve Bank of New York’s research, absorb about 90% of the cost of broad-based tariffs, the outcome of this litigation is not an abstract separation-of-powers question. It is about whether the tariff bills they have been paying since July 24 are ultimately valid — or whether they, like those before, will someday be coming back.

Frequently Asked Questions

Who is actually paying the Section 301 forced-labor tariffs?

Research from the Federal Reserve Bank of New York, published in February 2026, found that close to 90% of the economic burden from Trump-era tariffs fell on US firms and consumers rather than on foreign exporters — who offset the tariff by reducing their prices by only a fraction of a percentage point. That means the 10% and 12.5% duties being challenged in this case are, for practical purposes, a tax on US importers and the American households who buy the goods they import. Outside estimates suggest Trump-era broad tariffs added hundreds to potentially more than a thousand dollars per year to a typical family’s costs, depending on purchasing patterns.

What happens if the court strikes down these tariffs?

Based on what happened when the Supreme Court invalidated the IEEPA tariffs in February 2026: the federal government could be required to issue refunds to every US importer that paid the Section 301 tariffs. The IEEPA refund was ordered on more than $166 billion in collected duties. As of August 2026, approximately $100 billion had been processed, illustrating how complex the refund process is even at scale. A third tariff invalidation would add a new refund obligation on top of those still being resolved. The timeline for any such refunds would likely span years.

What is Section 301 of the Trade Act of 1974, and why does the government think it supports these tariffs?

Section 301 is a 1974 law that authorizes the US Trade Representative to investigate and respond to foreign practices that are “unreasonable or discriminatory” and that harm US commerce. It has historically been used as a targeted, country-specific remedy — the China tariffs from Trump’s first term were its most prominent modern application. The current administration argues that a separate broad-discretion provision within Section 301 authorizes tariffs against the 60 economies it investigated for inadequate forced-labor enforcement. Critics, including officials who helped develop the statute, say Section 301’s selective design and fifty-year practice make it unsuitable for a near-universal tariff, and that the administration is stretching the statute beyond its intended scope to recreate a global tariff wall the Supreme Court already struck down.

Could this ruling limit any future president’s ability to impose sweeping tariffs?

Yes — potentially in a lasting way. The major questions doctrine, which the Supreme Court has applied with increasing rigor since 2022, requires that when an executive agency claims sweeping economic or political authority, it must point to clear and specific congressional authorization. Experts including the Peterson Institute’s Alan Wolff and Warren Maruyama have argued that if courts apply the major questions doctrine here, the ruling would establish that no specialized trade statute written for selective remedies can support a near-universal tariff regime — regardless of which party controls the White House. Congress would need to explicitly authorize such broad powers through new legislation before any future administration could try again.