Small Businesses Take Trump’s New Tariffs to Court, Again

President Donald Trump’s newest tariffs had barely taken effect before small businesses raced back to court.

Two groups of American companies filed lawsuits challenging tariffs of 10% to 12.5% on imports from 60 U.S. trading partners. The tariffs cover economies responsible for approximately 99.4% of all U.S. imports.

In other words, this is not a tiny trade-policy tweak. It is a sweeping change that could reach almost every corner of the American economy.

The Trump administration says the tariffs are designed to fight forced labor in global supply chains.

Countries that have adopted or committed to enforcing bans on forced-labor imports generally face a 10% tariff. Countries that have not taken those steps face a 12.5% rate. Certain raw materials, agricultural products and other critical goods are exempt.

The administration argues that countries failing to block forced-labor goods create unfair competition for American workers and businesses.

The companies suing are not necessarily defending forced labor. They are challenging whether the president has the legal authority to impose tariffs this broad.

One lawsuit was filed by Burlap & Barrel, a New York spice importer, and Collective Horology, a California watch retailer.

A second lawsuit includes educational toy company Learning Resources and several other small businesses. Both cases were filed in the U.S. Court of International Trade.

According to Reuters, the companies argue that Section 301 of the Trade Act was intended to address specific unfair trade practices involving particular countries or industries. They say the administration is stretching that authority to create what amounts to a near-global tariff system.

Tariffs are collected from American importers when products enter the country.

That means a spice company, toy manufacturer or independent retailer may suddenly pay thousands more for the same shipment. The business must then raise prices, accept smaller profits, delay expansion or cut costs somewhere else.

A U.S. International Trade Commission analysis of earlier Section 301 tariffs found that American importers bore nearly the full cost because import prices increased at roughly the same rate as the tariffs.

Large corporations may be able to negotiate better supplier deals or move production. Small businesses rarely have that kind of leverage.

For small companies, the tariff rate is only part of the problem. The constant legal and policy changes make planning nearly impossible.

Should businesses raise prices now? Order extra inventory? Find new suppliers? Wait for another court ruling?

Those are expensive questions without easy answers.

The courts will now decide whether Section 301 gives the administration authority to impose tariffs this sweeping. Until then, small businesses are stuck trying to run their companies while the rules keep moving beneath their feet.

And for many entrepreneurs, that uncertainty may be just as costly as the tariffs themselves.