Trump Said to Use 'Impossible' Foreign Labor Standards to Work Around Wine Importer's Tariff Victory

Small businesses will once again challenge President Donald Trump’s tariffs in federal court this week as they continue to feel the squeeze of the administration’s roller coaster policy on import taxes.

Spice importer Burlap & Barrel and rare watch importer Collective Horology will argue Wednesday in the Court of International Trade in New York City that the Trump administration did not properly establish forced labor cases against dozens of U.S. trading partners before levying duties on goods that numerous American importers buy.

The Office of the United States Trade Representative announced in late July that products from 60 top U.S. trading partners will be tariffed at 10% or 12.5%, depending on whether governments have or have not developed laws meant to combat forced labor. The new tariffs cover 99.4% of all goods imported into the United States, according to the office.

The "forced labor" tariff is a response to the U.S. Supreme Court's decision in a February case in which Victor Schwartz, a New York wine importer, successfully challenged the president’s unprecedented executive tariffs under the International Emergency Economic Powers Act, or IEEPA. The court ruled them unconstitutional.

The plaintiffs in the current case, represented by the legal advocacy nonprofit Liberty Justice Center, allege the administration exceeded its tariff authority delegated by Congress under the forced labor statute, Section 301 of the Trade Act of 1974. 

The plaintiffs also argue the tariffs are “arbitrary and capricious” because U.S. trade officials relied on “generalized assertions” that labor policies in 60 economies imposed concrete economic harm to the U.S.

Trade law expert blasts Trump usage

Ambassador Alan Wm. Wolff, a former trade official who helped draft the forced labor statute and filed a brief in support of the small business plaintiffs, said Section 301 was “designed for sort of a rifle shot of retaliation against a single foreign country doing some particular act that's been verified.”

Wolff served in the Carter and Ford administrations, and later as a deputy director-general at the World Trade Organization.

“I sat through the executive sessions of the committees that were drafting the statute,” he said. “No one ever conceived of the idea that you could just create a sort of a fake, bogus test for other countries – 60 of them — that none of them could meet.”

Wolff told States Newsroom in an interview Sept. 21 that the statute has never been used in this way.

“If the U.S. was serious about forced labor being dealt with in this fashion … it would say, ‘Well, we'll review it every six months, and if you put in a statute that has the following provisions, we would probably lift the tariff,’” he said. 

“There's none of that because the purpose is to have the tariff, not to combat forced labor,” he continued.

The Department of Justice declined to comment Monday on ongoing litigation.

The White House and the Office of the United States Trade Representative did not respond Monday.

One tariff after another

The legal challenge on behalf of small business plaintiffs is not the first one to be brought by the Liberty Justice Center, a nonprofit that focuses on “high-impact cases that defend individual liberty and challenge government overreach,” according to its website.

In February, the organization secured a victory against the Trump administration when the U.S. Supreme Court ruled the president’s unprecedented executive tariffs under the International Emergency Economic Powers Act, referred to as IEEPA, were unconstitutional.

The organization won the case on behalf of several small business plaintiffs, ranging from an Illinois-based toymaker and New York-based wine importer, to a Utah-based plastics producer and a Pennsylvania-based fishing gear company, among others.

Almost immediately after the high court struck down his emergency tariffs, Trump imposed a new wide-reaching 10% tariff on global imports under a separate statute – Section 122 of the Trade Act of 1974. The statute limited Trump to only 150 days.

The administration concurrently opened sweeping trade practice investigations, including under the Section 301 forced labor statute, on nearly all U.S. trading partners. The government announced its forced labor findings just as the earlier tariffs expired at the 150-day mark.

New duties ‘blatantly pretextual’

Sara Albrecht, the Liberty Justice Center’s CEO, described the administration’s new forced labor tariffs as “blatantly pretextual” to replace duties imposed under Section 122.

“And Section 122 was pretextual for the IEEPA tariff that rolled off this year when he lost at the Supreme Court. So we feel like our job wasn't done because we struck down the IEEPA tariff, and then the administration just did it again,” Albrecht said.

The organization is again representing small business plaintiffs who allege harm to their bottom line because of the administration’s tariff policy. 

Burlap & Barrel, a New York-based company with warehouses in Hagerstown, Maryland, and Las Vegas imports spices from 22 countries. The California-based Collective Horology imports high-end mechanical watches from independent makers in six European nations.

“They are two individual American small businesses that have been swept up in a political kind of debate. We're arguing this on behalf of every American small business, every American business that is being forced to once again pay illegal tariffs,” Albrecht said.

The organization has asked the Court of International Trade for class status.

“You have to keep in mind that they're just getting their IEEPA refunds right now, and we're almost done with that. But they had to start paying Section 122 (tariffs), and then when that stopped, they had to pay Section 301 (tariffs). So a lot of these businesses are effectively loaning all of their working capital to the U.S. government while we kind of sort this out in court,” Albrecht said.

The Liberty Justice Center had also challenged the Section 122 tariffs on behalf of Burlap & Barrel.

U.S. Customs and Border Protection is still in the process of refunding roughly $166 billion worth of tariffs paid by businesses under Trump’s IEEPA import charges.

“We're a small nonprofit that is, you know, 12 attorneys trying to again strike down the tariffs, and it would be nice if someone else wanted to jump into the fight,” Albrecht said. “So we're doing the best we can, and I think we've done a good job so far.”

Prior to the tariff case win, the organization was most well known for its role in successfully arguing before the U.S. Supreme Court in Janus v. AFSCME, in which its client Mark Janus challenged public sector unions over paying dues. – Ashley Murray, States Newsroom.