By Satyaki Chakraborty
A coalition of 25 Democratic-led US states has sued the US administration on Monday, alleging that the US president Donald Trump exceeded his legal authority by imposing sweeping tariffs on 60 trading partners and asking the US Court of International Trade to block the measures and declare them unlawful. This is the most comprehensive legal challenge to Trump’s tariff actions taken using section 301 of the U.S. trade Act.
The lawsuit exposes both the fragile legal basis of the US administration’s tariff policy and the country’s deepening partisan divide, Trade experts in US are baffled at the way the President is using trade destabilizing the existing patter and inviting wrath from the friendly nations.
The states’ lawsuit follows challenges filed by a group of small US businesses, which sued to block the tariffs on the day they took effect in July, The complaint challenged the imposition of 10 per cent or 12 per cent on most of the goods imported from the affected economies, sixty in total which together account for 99.4 per cent of U.S. imports.
The states alleged that US Trade Representative Jamieson Greer rushed investigations into 60 economies, failed to conduct the country-specific consultations required under US trade law and did not adequately explain why nearly uniform tariff rates were appropriate for economies with widely different policies. Though the states are all run by the Democrats, the concerns are shared by the Republicans run states also many of whose businessmen supporters have expressed worry at the impact on the American business and the consumers.
“There is no rational fit between the purported problem of forced labour in international supply chains and the blanket global tariffs the United States Trade Representative (USTR) imposed,” the states’ complaint said.
The states are asking the court to block the tariffs, declare them unlawful and order the administration to refund duties collected under the measures, according to the news agencies.
The 25 states’ lawsuit is the latest legal challenge to the US tariff agenda, following a series of setbacks in court. In February, the US Supreme Court ruled that the International Emergency Economic Powers Act did not give the president the authority to impose his earlier sweeping tariffs.
Such a sweeping application of Section 301 amounts to an expansion and abuse of the provision, He added.
On July 23, the USTR announced sweeping tariffs on goods from 60 economies, including a 12.5 percent levy on Chinese imports, following Section 301 investigations into their alleged failure to ban imports produced with “forced labour.” The measures took effect the following day, replacing a previous10 percent global tariff as it expired.
The US determination to preserve a broad tariff regime also points to the failure of its previous measures, which neither reduced the US trade deficit nor generated more manufacturing jobs,
The US has nevertheless continued to pursue the policy, which shows that its primary objective is not the broader interests of the US economy, but the consolidation of the administration’s domestic political base through an increasingly protectionist agenda, He added.
Opposition to the tariffs has also extended beyond the courtroom, with businesses and trade groups in the US and other affected economies warning of higher costs and supply-chain disruptions.
Industry associations from economies targeted by the investigation also voiced opposition, including the Canadian Federation of Agriculture, the German Chamber of Commerce and Industry and the Lima Chamber of Commerce in Peru.
Brazil has also taken the dispute to the multilateral level. The World Trade Organization said on July 30 that Brazil had requested dispute consultations with the US over tariffs imposed on Brazilian goods, according to CCTV News.
As the US continues to raise trade barriers, other economies will accelerate the diversification of their markets and supply chains, He said. “In the long run, the US will bear the cost, as tariffs make imported intermediate goods and components more expensive for American companies, with the burden ultimately passed on to manufacturers and consumers.”
China’s Ministry of Commerce said on July 27 that the US has yet to ratify the Forced Labour Convention of 1930, but has long manipulated the issue of so-called “forced labor.” Launching Section 301 investigations and imposing unilateral tariffs under that pretext constituted a typical act of unilateralism and protectionism, which China firmly opposes, a ministry spokesperson said.
The spokesperson said China would continue to closely monitor and comprehensively assess subsequent US actions, and reserve the right to take all necessary measures, urging the US to correct its erroneous approach and completely remove the unilateral tariffs.
As regards India, the concern is not because the additional 10% tariff is economically catastrophic, but because it fundamentally alters the character of the India-U.S. trade relationship. At first glance, India appears to have emerged relatively unscathed.
The Office of the U.S. Trade Representative (USTR) reduced the proposed additional tariff on Indian exports from 12.5% to 10% after New Delhi amended its Foreign Trade Policy to prohibit imports of goods produced through forced labour. The Ministry of Commerce rightly points out that this followed months of sustained engagement with Washington through written submissions, public hearings and bilateral consultations. Nearly 45% of India’s exports to the United States—including generic pharmaceuticals, smartphones, and products already covered under Section 232 tariffs such as steel, aluminium and auto parts—remain exempt from the new duty.
Compared with several competing economies facing higher tariffs, India has secured a relatively favourable position. That is the good news. The bad news is that India may be celebrating a tactical victory while overlooking a strategic defeat.
The reduction from 12.5% to 10% has dominated headlines. But the real story is not the tariff rate. It is the permanence of the instrument. The Section 301 duties have no sunset clause. They remain in force until the United States alone determines that compliance has been achieved. In other words, Washington acts simultaneously as investigator, prosecutor, judge and executioner. (IPA Service)
