The tariff wall did not come down; it changed statutes.

At 12:01 a.m. Eastern on July 24, the exact moment the temporary Section 122 import surcharge expired, duties of 10% or 12.5% took effect on goods from 60 economies under Section 301 of the Trade Act of 1974. Those economies account for roughly 99.4% of U.S. imports by value. Two lawsuits filed that day at the U.S. Court of International Trade describe the forced-labor tariffs as the third unlawful version of a single global tariff regime. The filings follow the Supreme Court’s February ruling striking down the International Emergency Economic Powers Act tariffs and the May ruling invalidating the Section 122 surcharge.

The importers challenging the tariffs are not opponents of forced-labor restrictions. Burlap & Barrel, the New York spice importer leading a proposed class action, says it buys only from suppliers that meet labor standards and pays smallholder farmers several times what they otherwise receive. Learning Resources, the family-owned toy company that prevailed against the IEEPA tariffs at the Supreme Court, says in its complaint that plaintiffs “in no way, shape, or form condone reliance on forced labor or forced-labor imports. But that is not the real issue here.”

In a notable irony, a measure framed as an attack on exploitation in global supply chains appears to have landed first on importers that built their businesses around avoiding it.

What Changed at the Border

Seventeen economies received the 10% rate, including Canada, Mexico, India, Indonesia, Bangladesh and the United Kingdom. The rate applies because each has a forced-labor import prohibition, has committed to impose one under an Agreement on Reciprocal Trade, or has a partial regime. All other economies pay 12.5%.

Five economies were treated differently. For the European Union and Taiwan, the duty is the higher of 10% or the most-favored-nation rate, meaning goods already subject to 10% or more see no additional charge. Japan, South Korea and Switzerland receive the same treatment at 12.5%.

The duty layers on top of existing charges rather than replacing them. Covered goods still owe ordinary customs duties, antidumping and countervailing duties, and existing Section 301 duties, so Chinese and Brazilian goods now face both. Section 232 goods are excluded entirely: steel, aluminum, copper, autos, auto parts and timber. Canadian and Mexican goods entered free of duty under USMCA are exempt, as are CAFTA-DR textiles.

That leaves classification, not origin alone, as the key factor determining exposure. The notice spans 431 pages and consists largely of exclusion lists, which matters because importers and brokers must match product codes and exemptions precisely to know whether the new duty applies.

Users of foreign-trade zones lost a key planning tool. Covered goods admitted to a zone may enter only under privileged foreign status, which locks in the duty rate as of admission rather than at entry for consumption. Goods stored in a zone will not avoid the tariff if the rate later falls.

A four-day grace period also applied: goods already in transit before July 24 escaped the duty if entered by July 28. Two items remain outstanding. USTR will set textile quotas for Bangladesh, Cambodia, Indonesia and Malaysia in a separate notice.

The Core of the Lawsuits

Section 301(b) allows USTR to act only after finding that a specific practice of a specific country is unreasonable or discriminatory and burdens U.S. commerce, and any response must be aimed at eliminating that practice. Both complaints argue that USTR skipped the country-by-country analysis the statute requires.

Their strongest evidence is the timeline. USTR opened 60 investigations on March 12, proposed action on June 5, and issued final determinations 133 days after initiation. By comparison, a single China investigation in 2017 and 2018 took more than seven months. One comment period and one three-day hearing covered all 60 economies.

“The third time’s not the charm,” the Learning Resources complaint says in its opening paragraph.

The Burlap & Barrel complaint alleges the sequence ran in reverse, claiming USTR “determined the tariff rates first,” calibrated them “to replicate the invalidated IEEPA rates,” and “assembled economy-specific findings afterward.” Both complaints cite Treasury Secretary Scott Bessent’s statement that tariff revenue would remain virtually unchanged after the Supreme Court ruling. Both also argue in the alternative that if Section 301 can be stretched this far, it is an unconstitutional delegation of Congress’s taxing power.

Ed Gresser, vice president at the Progressive Policy Institute and a former assistant USTR for trade policy and economics, told the Section 301 Committee that the record cannot support the action. He estimated it “will likely cost American goods buyers about $100 billion annually.” Customs and Border Protection has blocked an average of roughly $800 million a year over the last three fiscal years on suspicion of forced-labor content.

“We do not see in the Report, in fact, any examples of shipments of goods verifiably made with the use of forced labor passing through customs and into consumer markets or production chains,” Gresser testified.

Why the Duty May Survive Anyway

USTR has built a substantial administrative record: two rounds of hearings, more than 2,100 comments and consultations with more than 45 investigated governments. It also has evidence that the threat of tariffs changed behavior. Between the June proposal and the final action, four economies adopted forced-labor import prohibitions and a fifth signed a trade agreement. All five were moved from 12.5% to 10%.

The final notice is also structured to withstand partial judicial invalidation. Pages 71 and 72 say each of the 60 tariff actions is separate from the others, intended to operate independently, and that if any exemption is struck down the tariff still applies to the goods that exemption covered. A ruling against one economy would not automatically unwind the rest, which means any court fight may need to proceed economy by economy.

Recent history suggests collection may continue while litigation proceeds. The Court of International Trade struck down the Section 122 surcharge on May 7, the Federal Circuit stayed that injunction on June 11, and duties continued to flow during the appeal.

What Importers Are Doing Now

Burlap & Barrel says it has five shipments arriving at the ports of New York and New Jersey and Baltimore worth about $124,407, with an expected tariff near $13,888. The company says it absorbed earlier tariffs and that these duties end that.

Its proposed class covers importers of record that have paid, or will pay, duties on merchandise entered on or after July 24, a group the complaint says includes many thousands nationwide. The suit seeks refunds with interest and an injunction barring collection. No class has been certified, and no court has ruled.

Barry Appleton, a North American trade lawyer with more than 30 years of experience, told USTR during the comment period that the Trade Act pointed to a forum the agency did not use: the dispute-settlement machinery in the agreements already signed by the targeted partners.

“A dispute resolved through that forum produces a binding panel decision and a compliance record,” Appleton wrote. “A dispute resolved by tariff produces only a tariff.”

The stakes are significant because the new Section 301 tariffs lock in duties of 10% to 12.5% on nearly all U.S. imports just as earlier global tariff regimes were struck down, forcing importers to pay now while courts decide whether the process was lawful. The dispute also tests how far the government can stretch trade statutes to preserve revenue and leverage while those challenges play out.