Two US businesses sue Trump admin over Section 301 tariffs, seek removal and refunds

Phil Neuffer Mon, July 27, 2026 at 8:42 AM PDT | 4 min read

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Two U.S. businesses are suing the federal government over new Section 301 tariffs imposed last week, adding another chapter of legal scrutiny for the Trump administration's duty-reliant trade policy.

The companies — spice importer Burlap and Barrel and watch retailer Collective Horology — are calling for the removal of the new levies and the payment of refunds, according to a lawsuit filed with the U.S. Court of International Trade on Friday.

Key Arguments in the Lawsuit

In the filing, the businesses argue that the tariffs — installed to address forced labor regulations of more than 60 trading partners — are:

• "Arbitrary and capricious"
• Being used as a backdoor attempt to replace levies that were previously removed

The businesses also claim the Trump administration did not effectively follow or meet Section 301 requirements before imposing the duties.

Timeline of Events

• February 2026: The Supreme Court revoked sweeping tariffs installed under the International Emergency Economic Powers Act (IEEPA), including a global baseline duty of 10%.
• Following the ruling: President Donald Trump implemented temporary Section 122 tariffs.
• March 2026: U.S. Trade Representative Jamieson Greer launched a forced labor investigation and a separate probe into global manufacturing capacity.
• Late June 2026: Greer announced the conclusion of the forced labor probe and proposed a 10% or 12.5% tariff on 60 trading partners.
• July 2026: A comment period and public hearings were held, with some adjustments made before the tariffs were imposed.
• Friday, July 24, 2026: The Section 301 tariffs went into effect — exactly 150 days after the Section 122 tariffs were implemented, and the same day the lawsuit was filed.

Duties installed under Section 301 can remain in place for up to 150 days unless extended by an act of Congress.

Allegations of Procedural Irregularities

"The rates imposed by the Section 301 Action closely track the rate structure previously imposed or negotiated under the invalidated IEEPA program, including its 10 percent baseline tariff and additional country-specific rates," the lawsuit states.

The lawsuit further alleges the Trump administration determined the Section 301 tariff rates before concluding the investigation and then assembled supporting evidence to install the duties after the fact.

Alexander Schaefer, a partner at Crowell & Moring, told Supply Chain Dive in an email last week:

"The Trump administration will now have to convince the court 'that the proportional relief to the alleged harm occasioned by each of the 60ish countries just happened to fall in the 10-12.5% range in every instance, which in turn just happened to be more or less the same rate heretofore deployed under Section 122.' That strikes me as a pretty tough sell."

Beyond questioning the integrity of the investigation's outcome, the lawsuit also asserts that the probe was completed in a protracted timeline that breaks with historical precedent. The lawsuit notes that a previous Section 301 investigation into China's policies related to technology and intellectual property — conducted during the first Trump administration — took more than twice as long.

"The abbreviated process, the scope of the action, and the resulting record demonstrate that USTR did not genuinely consider the economy-specific questions its final action purported to resolve," the lawsuit says.