The Court of International Trade in New York heard two-and-a-half hours of arguments Wednesday in a case challenging the 10-12.5 percent duties the Trump administration applied to imports from 60 U.S. trading partners — levies that took effect July 24 and now sit at the center of apparel and retail sourcing decisions.

Four small businesses and 25 states brought the suit. Their core claim: President Donald Trump exceeded his authority under Section 301 of the Trade Act of 1974, the statute the Office of the U.S. Trade Representative used after an investigation alleging that dozens of economies failed to impose or adequately enforce bans on imports made with forced labor. The affected list spans China as well as allies with trade agreements — the European Union, the United Kingdom, Canada and Mexico.

Pratik Shah, attorney for two of the plaintiff businesses, told the three-judge panel that Trump colored far outside the lines of his "carefully constrained" power to impose duties under Section 301. Traditionally, such probes target individual economies. Here, one investigation blanketed 60.

Shah also argued the administration's need for speed — its global Section 122 duties expired in July — overrode its ability to meet the legal requirements that would justify new tariffs. "If you're going to do it at breakneck speed and try to cover the entire globe, you still have to satisfy the statutory requirements," he said, according to Reuters.

The judges pressed both sides. According to CNBC, one justice responded "So what?" when Shah suggested the government was pursuing objectives beyond righting forced labor wrongs through the tariff scheme. Administration officials, including Treasury Secretary Scott Bessent, have framed Section 301 as a tool to rebuild the tariff strategy after legal setbacks — most notably at the Supreme Court.

Eric Hamilton, deputy assistant attorney general for the Federal Programs Branch of the Justice Department's Civil Division, defended the USTR's process. He said the agency did its due diligence in evaluating the countries in question and that its burden of proof was not "metaphysical certainty" that forced labor burdened U.S. commerce. Hamilton acknowledged a "common basis for the determinations" across all 60 targeted economies but insisted each was investigated individually.

For sourcing teams, the practical stakes are straightforward. A ruling against the tariffs could unwind duties now embedded in landed costs across dozens of sourcing destinations, from Asian manufacturing hubs to nearshore partners in Mexico and Canada. A ruling for the government would cement Section 301 as the durable tariff authority officials have promoted — and a long-term cost factor in vendor negotiations.

The judges said they plan to decide as speedily as possible, though whether that means weeks or months remains unknown.

A second front is also in play. In March, the USTR launched a Section 301 investigation into 16 economies over alleged industrial excess capacity, arguing their manufacturing output exceeds domestic consumption and floods the U.S. market with cheap goods that undercut local producers. The agency has not released results.

Josh Teitelbaum, senior counsel at Akin Gump Strauss Hauer & Feld LLP, offered two explanations at Sourcing Journal's annual Sourcing Summit on Tuesday. The excess-capacity report demands far more work than the forced labor report, which was "essentially an on-off switch," he said — whether a country has a forced labor import ban, yes or no.

"Excess capacity is a totally new concept the USTR is dealing with, and so you got to flesh this out and create a far more individualized analysis for each country," Teitelbaum said.

At some point, he added, "the political considerations took over." Tariffs drive up retail prices, and consumers vote in November. "Is the president going to put on a 7.5-10 percent tariff four weeks before the midterm elections?" Teitelbaum asked. "I guess we'll find out in four weeks."

Importers should watch both dockets: the court's imminent ruling on the forced labor duties and a USTR excess-capacity determination that could land — or be delayed past — the midterm elections.