Judges on the Court of International Trade on Wednesday openly questioned whether the U.S. Trade Representative followed the law when it imposed forced-labor tariffs of 10% to 12.5% on 60 economies — covering 86 countries — in July.

The three-judge CIT panel heard oral arguments in a challenge brought by Burlap & Barrel, a spice company, and Collective Horology, a watch retailer. Both businesses argue the U.S. Trade Representative overstepped its authority under Section 301 when it levied the duties.

USTR justified the July action on the grounds that the targeted countries showed a "failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor." The 60 economies include the 27-nation European Union.

Justice Department attorney Eric Hamilton faced the tougher line of questioning. The judges repeatedly pressed him on why the government appeared to bypass a provision of the Forced Labor Tariffs Act of 1974. That provision deems the imposition of tariffs unreasonable unless USTR first determines that "such acts, policies, and practices are not inconsistent with the level of economic development of the foreign country."

The provision exists to give developing countries leeway, since forced labor can be more prevalent at lower levels of economic development.

Hamilton argued USTR instead relied on broader language elsewhere in the statute, which allows the trade representative to levy duties when "an act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts United States commerce."

That drew a sharp response from CIT Judge Timothy Reif, who asked Hamilton whether he was "ignoring the statute's definition of unreasonableness" contained later in the law.

Hamilton said USTR was not ignoring it — the statute simply does not require it.

"The economic development language is not a requirement for the trade representative to consider," Hamilton said, while conceding the language does expand the trade representative's discretion. He described it as "something he or she can choose to consider in reaching some sort of judgment" on whether a country has engaged in a "persistent pattern" of violations. Nothing in the statute obligates USTR to make a determination on whether tariffs are unreasonable given a country's level of economic development, he argued.

Pratik Shah, representing the plaintiffs, told the panel that USTR should have made that determination.

"You can't exercise discretion without considering it," Shah said. "It's not a reasoned exercise of discretion if you don't consider it."

He criticized the sweep of the action: "Instead, they swept across all 86 countries and say it's per se unreasonable for all 86 of these countries, all 60 economies, not to have an express ban on forced labor imports."

Shah also attacked the government's burden analysis — the country-by-country findings USTR used to show that foreign practices restrict U.S. commerce. Those analyses, he said, lacked enough detail to prove the government's case.

Reif and Judge Jennifer Choe-Groves pressed Hamilton on the same point.

"You answered Judge Choe-Groves' question that these are findings country by country, and yet you would not disagree that the report makes extrapolations based on similarly situated contexts," Reif told the government attorney.

Hamilton defended the approach. "I think that every 301 investigation is going to have differences," he said, pointing to other Section 301 investigations that covered multiple countries.

Shah countered that USTR had essentially done a copy-and-paste job across the country analyses.

"You can't just say we made the finding," he said. "Our argument isn't that you didn't literally make the finding for each country, our argument is your approach. You didn't take the country-specific approach and analysis that the statute requires."

For importers and downstream buyers — including food and ingredient companies sourcing from dozens of affected markets — the case will determine whether the July tariffs, now ranging from 10% to 12.5%, survive judicial scrutiny. A ruling striking down or narrowing the duties would relieve cost pressure on imported inputs; a decision upholding USTR's reading would confirm broad discretion to impose multi-country tariff actions under Section 301. The panel gave no timeline for a decision.