US Trade Court to Decide Fate of Trump's "Forced Labor" Tariffs

The battle over President Donald Trump's tariff powers returns to court on Wednesday, as the U.S. Court of International Trade hears a challenge to sweeping duties the administration imposed on goods from more than 60 trading partners over alleged forced labor practices.

The hearing in New York is the latest chapter in a year-long legal war over how far a president can go in taxing imports without Congress — a fight that has already produced a landmark Supreme Court defeat for the White House and left up to $175 billion in collected tariffs in legal limbo.

According to reports, four small businesses and 25 Democratic-led states argue the "forced labor" tariffs, imposed in late July, far exceed presidential authority. The duties range from 10% to 12.5% and cover more than 99% of goods imported into the United States, including products from the European Union and China.

The challengers say the administration conducted no genuine investigation into forced labor and is simply using the label as a pretext to revive the kind of unfettered global tariff power that U.S. courts have repeatedly rejected.

A three-judge panel — appointed by Presidents Trump, Barack Obama and Joe Biden — will hear the consolidated lawsuits. The panel is not expected to rule from the bench; a written decision will come later.

President Donald Trump has made tariffs a central pillar of his economic and foreign policy.

The U.S. Supreme Court building in Washington, D.C.

How We Got Here: The Supreme Court Defeat

The roots of Wednesday's hearing go back to February 20, 2026, when the U.S. Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump that the president could not use emergency economic powers to impose sweeping global tariffs.

Trump had invoked the International Emergency Economic Powers Act of 1977 (IEEPA), arguing that persistent U.S. trade deficits amounted to a national emergency justifying the "Liberation Day" tariffs he announced in April 2025. Tariffs, he had often said on the campaign trail, were "the most beautiful word in the English language."

Chief Justice John Roberts, writing for the majority, disagreed. The opinion held that the power to tax — including tariffs — belongs to Congress under the Constitution, and that the president needs clear congressional authorization to impose them unilaterally. Congress, Roberts wrote, had never given it.

Trump called the decision "disgraceful" and said he was "ashamed" of the court. But within hours, his administration had a replacement ready.

The Stopgap: 10% Becomes 15%

On the Friday night of the ruling, Trump signed an executive order ending all IEEPA tariffs and immediately imposed a new 10% global tariff under Section 122 of the Trade Act of 1974 — a statute that lets a president impose uniform tariffs of up to 15% for 150 days to address serious balance-of-payments deficits.

By Saturday morning, the rate had been raised to the legal maximum of 15%. Unlike the IEEPA tariffs, Section 122 duties must apply uniformly to all countries rather than targeting specific ones.

The administration was candid about the strategy: the 150-day window — roughly through July 2026 — would serve as a bridge while it built longer-lasting tariff authority under other laws, including Section 301 investigations into unfair trade practices across more than 16 countries and Section 232 probes spanning over 60 economies.

When the temporary Section 122 tariffs expired, the White House invoked yet another authority — and the "forced labor" tariffs now before the court were born.

What the Challengers Argue

The three consolidated lawsuits make a simple claim: the president is dressing up the same rejected global tariff power in new legal clothing.

Rather than conducting the country-specific investigations the law requires, the administration simply declared that goods from dozens of economies were tainted by forced labor and taxed them, the challengers argue. The tariffs apply to allies and rivals alike, from the EU to China, which the plaintiffs say exposes the national-security and labor justifications as pretext.

The administration counters that tariffs remain a central pillar of its foreign policy and a legitimate tool to pressure trading partners and protect American industry. It has used them as leverage in negotiations around the globe.

The $175 Billion Question

Hanging over the entire tariff saga is an enormous practical question: what happens to the money already collected?

U.S. Customs and Border Protection had gathered roughly $133 billion in IEEPA tariffs by mid-December 2025, with independent estimates climbing as high as $175 billion into 2026, according to analyses cited in reporting on the case.

The Supreme Court did not order refunds directly, sending the question back to lower courts. Legal experts describe the path to repayment as chaotic and prolonged: claims would go first to the importers of record — the companies that paid duties directly — not to downstream businesses or consumers who absorbed higher prices. There is no automatic refund mechanism, and the administration has signaled it will fight repayment in court for months or years.

Trump himself has warned of the stakes, telling reporters the government could "end up in court" for years over refund claims.

Shipping containers at a port — tariffs on imported goods ripple through global supply chains.

What This Means

Wednesday's hearing will not end the tariff wars, whatever the panel decides. If the court strikes down the forced labor tariffs, the administration has already shown it will reach for the next available statute — the Section 301 and Section 232 investigations now underway could supply standalone authority for targeted duties that do not depend on emergency declarations at all.

If the tariffs survive, it will embolden a White House that has treated every adverse ruling as an invitation to find a new legal door.

For businesses, the message is uncertainty: tariff levels can change with a court calendar, supply chains must be built for multiple scenarios, and the refunds question alone could take years to resolve.

What Happens Next

After Wednesday's arguments, the three-judge panel will deliberate and issue a written ruling at a later date. Either side is widely expected to appeal, which means the dispute could climb back toward the Supreme Court — the same court that already ruled against the president's tariff powers once this year.

For now, the duties remain in effect, the meter keeps running on billions in collections, and the question of who ultimately pays for America's tariff experiment — importers, consumers, or the Treasury itself — stays unanswered.