5 minutes of readingNew DelhiJuly 25, 2026 12:00 pm IST
one day later The United States imposed new tariffs on 60 countries, including a 10% tariff on IndiaTwo small American companies – Burlap & Barrel, a spice importer, and Collective Horology LLC, a watch retailer – have filed a case against the United States Trade Representative (USTR) for using Section 301 to impose tariffs that impact “99.4% of all imports into the United States,” case documents show.
This takes on special significance for India as New Delhi has committed to a trade deal with the United States but has not yet formally signed it. Government officials say India is willing to sign the deal when the new American architecture gives India a competitive advantage compared to its competitors in the Association of Southeast Asian Nations (ASEAN) region, one of the fastest growing regions globally. The United States had opened two Section 301 investigations, one into “excess capacity” and the other into “forced labor.”
The small business argued that the USTR failed to provide a “reasoned, record-based explanation for its determinations or for its selection of nearly uniform duties” across 60 economies with materially different application records and business profiles. They argue that if Section 301 were interpreted to allow such broad power, it would constitute an unconstitutional delegation of Congress’ power from Article I to establish duties.
“Section 122 tariffs were limited by law to 150 days. The Administration used that period to conduct the Section 301 investigations at issue and then imposed the challenged Section 301 tariffs. The sequence and structure of those actions, as well as the Administration’s statements, show that the Section 301 Action was designed to preserve substantially the same broad tariff regime that this Court and the Supreme Court have held that Congress did not authorize under the IEEPA and Section 122,” the small businesses argued.
The United States has imposed Section 122 tariffs, imposing 10% tariffs globally immediately after losing the IEEPA case in the US Supreme Court. India faced high tariffs of 50% for more than five months. In 2025-26, exports of products covered by the exclusion list [electronics and pharma] exports of non-excluded products fell by 11.2% during the same period, declining from $57.1 billion to $50.7 billion, a contraction that reflects the true effect of the tariff measures imposed by the United States, according to a report by the Indian Council of Research on Foreign Relations. International Economic Organizations (ICRIER).
“Section 301 action exceeds the authority granted by Congress in Section 301. Section 301 is a targeted, country-specific, practice-specific remedial authority. It allows the Trade Representative to act only if he determines that a particular act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts the commerce of the United States… It is not a stand-alone authorization to tax substantially all imports from substantially all trading partners at rates selected to replicate the invalidated IEEPA tariff regime instead of eliminating identified foreign practices,” American small businesses argued.
Experts have said that Section 301 is a much more powerful tool than the International Emergency Economic Powers Act (IEEPA) tariffs, which were used to impose reciprocal tariffs but were not approved by the US Supreme Court. This legal tool was primarily used by the United States against countries like Europe and Japan, dominant export powers at the time, before the WTO was born in 1995. The Trump administration has once again resurrected Section 301 amid a weakened WTO.
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The Singapore-based Henrich Foundation explained that under Section 301, the USTR gains broad powers not only to impose tariffs but also other types of restrictions. The USTR may “withdraw or suspend concessions from trade agreements,” enter into binding agreements with the foreign government to eliminate conduct or alleviate U.S. trade, or compensate the United States with satisfactory trade benefits.
“After consultations, the USTR must investigate to determine whether the action is unfair and harms U.S. commerce. This investigation may result in a determination of mandatory or discretionary actions. The former include violations of trade agreements, unjustifiable conduct, or burdensome or restrictive conduct. Because Section 301 need not apply only to goods, other retaliatory actions are permitted, such as restricting terms or conditions or refusing to issue any ‘service sector access authorization,'” the Foundation report says. Henrich.
Deborah Elms, Head of Trade Policy at the Hinrich Foundation, had said that Section 301 could have a firmer legal basis and that the tariffs imposed could reach any level as long as required procedures are followed. The USTR began the investigation in March and presented its findings after the required duration. He has also allotted time for public comment.
“Courts, if asked to examine the use of Section 301, will likely give the President broad deference as long as the required procedures are followed. Remember that the law sets maximum deadlines, not minimums. Past cases have often been subject to a narrow focus. Future cases need not be so restricted. Tariffs can be part of any retaliation package, set at any level, along with a wide range of other actions to address the allegation of trade practices. disloyal,” Elms said.