U.S. states sue to stop Trump’s forced labour tariff on dozens of countries

More than two dozen U.S. states filed a lawsuit Monday seeking to strike down U.S. President Donald Trump’s tariffs on 60 trading partners — including Canada — over forced labour concerns, arguing he exceeded his authority.

The tariffs were announced last month by the U.S. Trade Representative’s office under Section 301 of the U.S. Trade Act of 1974, over allegations that countries were not doing enough to stop the trading of goods produced with forced labour.

Nearly all U.S. imports are covered by the tariffs, which range from 10 to 12.5 per cent.

But the lawsuit, filed by Oregon and 24 other Democrat-led states in the U.S. Court of International Trade in New York, argues the tariffs are simply meant to replace Trump’s previous temporary 10 per cent global tariff that expired just as the new duties were announced.

The timing “confirms that the tariff action is pretextual, arbitrary, capricious, and contrary to Section 301’s statutorily constrained purpose,” the statement of claim says.

“Despite losing every step of the way, Trump is trying yet again to inflict more chaos on working families and homegrown Oregon businesses,” Oregon’s Attorney General Dan Rayfield said in a statement.

The challenge comes after a group of American small businesses filed a pair of lawsuits seeking to block the new tariffs one day after they were announced.

The European Union and 59 other countries were targeted, with Canada and Mexico facing the lower 10 per cent tariff rate on goods not covered by the Canada-U.S.-Mexico agreement on free trade.

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Canada has protested its inclusion in the tariff policy, arguing it has significant safeguards to keep forced labour products out of its supply chains and is pursuing additional measures.

2:20 Canada doing ‘everything we can’ to end forced labour amid new tariffs: Robertson

The U.S. Supreme Court ruled against most of Trump’s widest-ranging tariffs in February, finding that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to unilaterally impose “reciprocal” tariffs on trading partners.

Trump responded to that ruling by calling Supreme Court justices that voted against his policy “disloyal,” and quickly imposed new 10 per cent tariffs under a different statute of the Trade Act, Section 122, which only authorizes tariffs for 150 days.

Those tariffs were also ruled illegal by the U.S. Court of International Trade, but they remained in effect while the Trump administration appealed.

The Section 122 tariffs were set to expire at midnight on July 24 unless Congress voted to extend them. The Section 301 tariffs were announced on the evening of July 23.

0:50 U.S. hits dozens of countries, including Canada, with new 10% tariff

Section 301 of the Trade Act is meant to combat unfair or discriminatory economic practices by other nations.

But the states’ lawsuit contends it was merely a pretext to reimpose a global tariff, noting the new policy does not distinguish between individual economies and the impact of their alleged use of forced labour products on the U.S.

“Because the tariff action merely attempts to continue the president’s blanket global tariff policy, and the attempt ‘to obtain the elimination’ of forced labor in trading partners’ supply chains is pretextual, it is unlawful,” the court document says.

The states added that a sweeping tax on imports would do nothing to address the real problems of forced labour around the world.

“The United States is using its lawful authority to obtain the elimination of unreasonable acts, policies, and practices that burden U.S. commerce,” White House spokesman Kush Desai said in a statement to the Associated Press and Reuters.

“A foreign country’s failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor is unreasonable and burdens U.S. commerce, including American workers, and must be addressed. Section 301 tariffs have proven to be a legally durable tool since the President’s first term, and they remain so now.”

—With files from Reuters