Halvorson frames the shift in broader terms. Three different statutes, three different sets of conditions and limitations, but for companies the lesson remains regardless of which one survives review. “Tariffs increasingly aren’t just a fixed cost to plug into a spreadsheet,” he says. “They’re a variable that can change during the lifecycle of a sourcing or purchasing decision.”
The compliance penalty
Beneath the state-budget argument lies a more fashion-specific claim: who actually shoulders the burden of these duties. The complaint argues that broad tariffs do not necessarily punish companies or countries tied to forced labor. They tax US importers, including firms that have invested in keeping forced labor out of their supply chains.
That is a particularly pointed claim for fashion, where cotton, apparel and footwear supply chains have been under sustained forced labor scrutiny, especially since the Uyghur Forced Labor Prevention Act entered into force. “A lot of these companies have invested so heavily on forced labor compliance, and they are not being rewarded at all,” Santos says. “They’ve invested millions of dollars on supply chain diligence, on programs, on codes of conduct, on audits, and they’re treated just like every other industry.”
The lawsuit makes a similar argument: flat tariffs can leave the comparative advantage of forced labor intact because compliant and non-compliant importers face the same duty, while companies spending more to keep their supply chains clean may struggle to absorb the added cost.
Santos does not expect the states’ complaint to be the last such filing. “This is probably just the beginning for 301,” she says, predicting more litigation, not less, as “the new normal for the next couple of years.” If the forced labor tariffs are struck down, she notes, the administration is not lacking in alternatives. “They have in their back pocket alternative authorities, like Section 338, that they would invoke.”
For smaller brands, the problem is more acute in the meantime. Curioni says litigation mostly adds uncertainty because a legal victory and a cash refund are not the same thing. “Winning and getting paid are two different moments, and they can be years apart,” she says. “A big company can wait. We cannot plan on a ‘maybe.’”
That means the commercial damage can happen long before a court ruling. A sourcing shift not made, a product not launched, a factory relationship not developed: none of it comes back with a refund.
“Maybe you get some duty back,” Curioni says. “You do not get back the product you did not launch or the factory you did not open. That part is gone.”
