A coalition of 25 U.S. states has filed a lawsuit to prevent the implementation of new federal tariffs targeting imports from 60 trading partners—including India—that were announced under Section 301 of the Trade Act of 1974. The states argue these tariffs are a thinly veiled attempt to reinstate duties recently struck down by the courts.
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## What sparked the lawsuit?
President Donald Trump’s administration issued sweeping import duties on goods from nearly every U.S. trading partner after the Supreme Court invalidated similar global tariffs imposed under the International Emergency Economic Powers Act (IEEPA).
Those earlier tariffs were nullified precisely because the court determined the president had overstepped his constitutional and statutory authority.
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## New tariffs under Section 301
Rather than relying on emergency powers, the administration shifted to Section 301, a statute that allows tariffs against countries whose policies are deemed “unjustifiable,” “unreasonable,” or discriminatory.
On July 23, 2026, the United States Trade Representative (USTR) announced tariffs of 10% to 12.5% on imports from 60 economies—accounting for nearly all U.S. imports. The agency cited these countries’ failure to enforce bans on goods made with forced labor as justification.
India was initially assigned a 12.5% rate but was later reduced to 10%. Exemptions were announced for certain goods—such as products under the US-Mexico-Canada Agreement and those already classified duty-free.
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## What the states claim
The lawsuit, filed in the U.S. Court of International Trade, accuses the Trump administration of trying to bring back tariffs that courts had recently struck down. It contends that these new tariffs are little more than a legal workaround to those previous rulings.
The states—mostly led by Democratic attorneys general—assert that:
– These tariffs once again exceed presidential powers granted by law.
– There is no valid balance-of-payments crisis or other justification for such sweeping trade penalties.
– The administration is failing to properly show how each country’s forced-labor enforcement failures harm U.S. commerce.
– It didn’t clearly explain how imposing broad tariffs would meaningfully change forbidden practices, as required by Section 301.
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## Legal and economic implications
The switch to Section 301 followed the Supreme Court’s February 2026 ruling that the IEEPA-based tariffs were unlawful. That decision had halted collection of the earlier global import tax.
Analysts warn that Section 301’s criteria are stringent: it requires the government to prove that practices are not only present but also damaging to U.S. commerce, and that the tariffs are a suitable remedy.
Simultaneously, officials have floated the idea of tariff exemptions and quotas for specific goods—especially raw materials, items not produced domestically, or those whose exclusion might spur compliance with forced-labor bans abroad.
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## Why India and others are affected
India is among the 60 economies under investigation. The USTR’s report found that India has not sufficiently prohibited or effectively enforced laws against imported goods produced with forced labor.
While India maintains trade talks and negotiated frameworks with the U.S., the proposed tariffs threaten to reshape key sectors such as textiles, chemicals, and machinery—especially since some goods originally earmarked for higher duties were lowered under pressure or review.
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## What comes next
The states’ lawsuit aims to stop the collection of these Section 301 tariffs, arguing that they are substantively the same as those previously ruled illegal. The court’s decision on this will likely hinge on whether the administration’s changes under Section 301 indeed remedy what the courts found unlawful before.
Meanwhile, legal challenges are not confined to state attorneys general. Several small businesses have also filed suits contesting Section 301 tariffs, particularly on the ground that the government has not established a specific link between each country’s alleged behavior and harm to U.S. interests.
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## Broader context
This legal friction follows a broader shift in U.S. trade policy—moving away from emergency powers toward statutes like Section 301 to provide a stronger legal foundation.
The administration has defended the change by pointing to mounting trade deficits, global supply chain concerns, and enforcement gaps in forced-labor prohibitions worldwide. Critics, however, warn of economic disruption, diplomatic backlash, and legal overreach.
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## What to watch
– Whether the Court of International Trade will issue a preliminary injunction halting the tariffs.
– The outcome of appeals from past rulings—especially that Supreme Court decision that declared IEEPA-based tariffs illegal.
– How countries—and industries—affected by these tariffs respond, both legally and diplomatically.
– Whether concessions, exemptions, or revised tariff schedules narrow the scope of Section 301 duties.
The case could redefine the limits of presidential power over tariffs, set precedents for how trade enforcement works in practice, and impact global supply chains significantly.
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