Small Businesses Sue to Block Trump’s Section 301 Tariffs

President Donald Trump has implemented a new round of Section 301 tariffs ranging from 10% to 12.5% on imports from up to 80 countries, covering 99.4% of US imports. The administration justifies the levies as a penalty for foreign failures to prevent forced labor. However, small businesses, including Burlap and Barrel and Learning Resources, have filed lawsuits in the US Court of International Trade. They argue the administration is unlawfully circumventing a February Supreme Court ruling that struck down previous global tariffs. The ongoing trade war has raised core goods prices by 3.1% and cost US households an extra $1,100 annually, posing political risks for Republicans ahead of the midterm elections.

Section 301 tariff implementation

• ▪President Donald Trump announced new Section 301 tariffs ranging from 10% to 12.5% on imports from approximately 60 to 80 countries.
• ▪The new Section 301 tariffs cover 99.4% of all United States imports and took effect at 12:01 a.m. ET on July 24, 2026.
• ▪The Trump administration justified the Section 301 tariffs by citing the targeted countries' failure to prevent or prohibit forced labor.

Supreme Court circumvention challenges

• ▪Small businesses filed two lawsuits in the US Court of International Trade challenging the legality of the new Section 301 tariffs.
• ▪The plaintiffs include Burlap and Barrel Inc., Collective Horology LLC, Learning Resources Inc., and hand2mind Inc., represented by the Liberty Justice Center.
• ▪The lawsuits accuse the Trump administration of using Section 301 to unlawfully replicate global tariffs previously struck down by the Supreme Court.

Consumer price inflation effects

• ▪The Federal Reserve estimated that the tariffs increased overall core consumer inflation by approximately 0.8 percentage points.
• ▪According to the Budget Lab at Yale University, United States households are spending an extra $1,100 annually due to the tariffs.
• ▪Federal Reserve economists estimated that President Donald Trump's second-term tariffs increased core consumer goods prices by 3.1% through February 2026.

Midterm election political risks

• ▪Voters continue to rank the high cost of living as their top concern ahead of the upcoming midterm elections.
• ▪President Donald Trump's low approval ratings for handling the economy and the war bode poorly for Republicans in the November midterm elections.

Manufacturing job losses

• ▪Manufacturing output in the United States has increased by 3.1% since President Donald Trump returned to office.
• ▪United States manufacturing employment declined by approximately 75,000 jobs between January 2025 and June 2026 despite an increase in manufacturing output.

Trade deficit changes

• ▪The Trump administration's tariffs have failed to substantially reduce the overall United States trade deficit or fully revive domestic manufacturing.
• ▪The United States trade deficit totaled $297.91 billion during the first five months of 2026, representing a 10% decline from 2024.