A coalition of 25 U.S. states has filed a lawsuit against the Trump administration, challenging its tariffs on 60 trading partners under Section 301 of the Trade Act of 1974. The administration had previously accused these trading partners of failing to prevent goods made with forced labor from entering the U.S. market.

The lawsuit, filed on Monday at the U.S. Court of International Trade, challenges the government's decision to impose tariffs of 10% or 12.5% on dozens of trading partners, including the European Union, China, Canada, and Mexico. The plaintiffs state that these levies were implemented "under the guise of combating forced labor in global trade," should be ruled illegal, and that related funds should be refunded to the states.

The lawsuit filing states: "This tariff action is arbitrary, capricious, and unlawful." It adds, "The government cannot use forced labor as a pretext to continue its unlawful tariff program."

The lawsuit notes that when implementing the Section 301 tariffs, the Office of the U.S. Trade Representative (USTR) did not align the tariff rates with the actual extent to which each economy is suspected of having goods tainted by forced labor, nor did it respond to comments and testimony that undermined its rationale.

The lawsuit states: "In short, there is no reasonable match between the problem of forced labor in international supply chains and the sweeping global tariffs imposed by the USTR."

The legal action also states that the USTR provided no mechanism for accused economies to escape the tariffs through remedial measures, and that it maintained an effective 10% tariff floor even for countries allegedly taking steps to combat forced labor.

The lawsuit names Trump, U.S. Trade Representative Jamieson Greer, Customs and Border Protection Commissioner Rodney Scott, and their offices as defendants.

The states filed the lawsuit just over a week after two U.S. companies launched the first legal challenges against the forced labor tariffs at the Court of International Trade. Spice importer Burlap and Barrel and watch retailer Collective Horology requested the cancellation of the new tariffs and refunds.

Similar to the states' lawsuit, the two companies argue that the government imposed the levies without fully satisfying the requirements of Section 301. They say the tariffs are a backdoor attempt to replace previously rescinded tariffs.

The two companies filed their lawsuit on July 24, the same day the Section 301 tariffs took effect and the day Trump's temporary Section 122 tariffs reached the end of their 150-day validity period. Trump implemented the Section 122 tariffs after the Supreme Court struck down tariffs based on the International Emergency Economic Powers Act (IEEPA).