Trump admin's Section 301 tariff policy may face legal challenge, says GTRI

GTRI says the US is offering preferential tariff treatment to some recent trade partners despite identical Section 301 determinations, preserving the benefits of recent trade agreements.

Last week, the Trump administration imposed new tariffs under Section 301 of the US Trade Act of 1974 on imports from several trading partners, including India, after determining they had "failed" to adequately address forced labour concerns. However, the move could face legal challenges because it departs from the traditional application of the law, the Global Trade Research Institute (GTRI) said in a new analysis.

 

The New Delhi-based think tank argued that Washington is offering preferential tariff treatment to some trade partners despite identical Section 301 determinations, effectively using the law to preserve the commercial benefits of recent trade agreements rather than applying it uniformly across countries.

 

 

Section 301 is designed to address unfair trade practices by US trading partners that harm American commerce and authorises the US Trade Representative (USTR) to impose tariffs or other trade restrictions in response.

 

However, the differing tariff treatment for countries covered by the same Section 301 legal finding suggests that the levy is now being determined largely by the existence of a recent trade agreement with the United States rather than the underlying violation, GTRI said.

 

It added that the new tariffs imposed under Section 301 indicate that the Trump administration is seeking to preserve the commercial benefits of recent trade agreements while advancing broader trade policy objectives.

 

According to the think tank, countries that received the same Section 301 forced labour determination are now subject to different tariff treatment depending on whether they entered into a trade agreement with the US over the past two years, a departure from the traditional application of the law that is likely to invite legal challenges.

 

How the tariff mechanism changed

 

The new tariffs came after the US Supreme Court, in a February 20, 2026 ruling, struck down the reciprocal tariff regime and removed the legal basis for tariff concessions that Washington had promised under trade agreements with the European Union, Japan, South Korea, Taiwan and Switzerland during 2025-26. GTRI said the new Section 301 forced labour tariffs effectively restore much of that benefit under a different legal authority.

 

Under the 2025-26 trade agreements, Washington had offered partner countries a maximum tariff ceiling of 15 per cent, with products attracting lower US Most Favoured Nation (MFN) tariffs paying only enough reciprocal duty to bring the total tariff to that level.

 

But now, under the July 23 determination, the European Union (EU) and Taiwan face a combined MFN and Section 301 tariff ceiling of 10 per cent, while Japan, South Korea and Switzerland are subject to a 12.5 per cent ceiling.

 

Thus, products with MFN tariffs below these thresholds pay only enough additional Section 301 duty to reach the ceiling, while products already attracting tariffs at or above the ceiling face no additional Section 301 levy.

 

India faces different tariff treatment

 

Despite receiving the same Section 301 forced labour determination, the European Union, Japan, South Korea, Taiwan and Switzerland were granted preferential tariff treatment, GTRI Founder Ajay Srivastava noted.

 

He added that the disparity is particularly evident in the treatment of India and the European Union (EU), where most Indian exports covered by the measure are subject to the applicable MFN tariff plus the full 10 per cent Section 301 duty, while EU exports pay only enough additional duty to bring the total tariff to 10 per cent.

 

Furthermore, GTRI said the commercial gains for partner countries under the new tariff regime appear limited, as the US trade-weighted average MFN tariff is only about 2.2 per cent. As a result, the preferential tariff treatment offers relatively modest additional market access in exchange for broad and long-term concessions on tariffs, regulations and domestic policies made by partner countries.