The new policy imposes 10% to 12.5% tariffs on 59 US trade partners, accounting for 99.4% of all American imports. This forces food supply chain operators to navigate fresh legal battles while still processing billions in refunds from the previous, unlawful tariff scheme. The ongoing uncertainty leaves food and beverage importers vulnerable to sudden price hikes and supply disruptions.
Forced Labor Tariffs Replace Unlawful IEEPA Duties
The administration previously raised roughly $133 billion through tariffs imposed under the International Emergency Economic Powers Act (IEEPA), justified by trade imbalances and fentanyl smuggling concerns. After federal trade courts and the US Supreme Court ruled those IEEPA duties unlawful, the government pivoted to Sections 122, 201, and 301 of the Trade Act of 1974. Section 122 allows a temporary 15% import surcharge, while Section 301 empowers the US Trade Representative to investigate trade partners for unfair practices.
The new forced labor tariffs apply a similar across-the-board approach to a different issue. Buzz Burwell, a partner at Nelson Mullins LLP, described the strategy as “deja vu all over again” during a Food Institute webinar. He noted that food and beverage companies relying on imported aluminum, tin, and steel for packaging could face higher costs. “This was, I think, a concept developed by forced labor issues coming out of China some years back, and now the administration is taking a look at the practices in other countries,” Burwell said. “It puts a burden on you as an importer, or if you’re procuring commodities from those jurisdictions, to be aware of what that increased cost could rise, how it could rise.”
State Lawsuits Target The Trade Act of 1974
Colorado Attorney General Phil Weiser is among the 25 state officials challenging the policy. He stated that 90% of tariff costs in 2025 were paid by American consumers and businesses. “The administration is tripling down on tariff policies that the federal trade courts and the US Supreme Court have ruled unlawful, and I’m confident they will do that same with this latest round,” Weiser said.
The state lawsuits, filed in August, are led by the attorneys general of Oregon, Arizona, and California. They are joined by 22 other states, including Connecticut, Illinois, Massachusetts, Michigan, Minnesota, New York, and Washington, along with the governors of Kentucky and Pennsylvania. The coalition argues the trade representative reached a foregone conclusion to impose across-the-board tariffs rather than actually combating forced labor.
Chris Cushing, government relations group leader at Nelson Mullins, noted the Court of International Trade assigned a three-judge panel to hear arguments. “Part of that is 25 attorneys general, I believe all Democrats, have sued. So we’re back in the courts relative to these tariffs,” Cushing said. The legal challenge focuses on whether the administration can use forced labor concerns as a workaround to replace the struck-down IEEPA tariffs.
What Happens Next
Food manufacturers face a stark choice: absorb the rising costs of imported materials or restructure their global operations. Cushing pointed out that a recent Miltec survey of 250 small businesses found 90% are delaying investment decisions due to tariff uncertainty. While the administration suggests companies manufacture in the US to avoid headaches, Cushing noted certain commodities simply cannot be produced domestically. “Obviously, there are some things we can’t manufacture in the US and there are other issues as to where you set your manufacturing,” he said.
Global retaliation remains uncertain. During the 2025 trade war, nations immediately responded with retaliatory tariffs that targeted American agricultural exports. Now, Cushing observed that most countries, including the EU, China, and Brazil, are leaning against retaliation to avoid further economic friction. “Most countries now are thinking that it’s best not to retaliate. The EU is kind of taking that position. We’ll have to see,” he noted. As the Court of International Trade prepares to hear the new state lawsuits, food supply chain operators must brace for continued volatility and legal whiplash under the latest Trump tariffs.
— Isabella Morales, food desk, AXO News