Tariffs ruled illegal simply get rebooted under different law
The US Trade Representative invokes Section 301 of the Trade Act to impose 10% or 12.5% tariffs on 60 economies accounting for 99% of US trade, using the same tariff structure the Supreme Court ruled illegal last year.
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The argument · tap a timestamp to hear it
After illegality ruling, the government reboots tariffs under a different statute
The Supreme Court ruled in February that Trump's first tariff round under IEEPA was illegal, but the government never backed down. Instead, it deployed two backup legal provisions: first the Section 122 tariff (150-day validity, currently also being challenged), which expired and seamlessly converted to the Section 301 tariff now in effect. Burlap and Barrel leads the Section 301 litigation, arguing the government skipped required procedures and exceeded legal authority by applying one blanket tariff across 60 economies.
— Peter HarrellThere is no domestic spice industry to protect
Black pepper, cinnamon, and vanilla cannot be grown commercially in America—there is no domestic industry to protect. This differs fundamentally from steel or semiconductor tariffs. The company sources from roughly 28 countries; Vietnam's royal cinnamon and Zanzibar's black pepper represent decades or generations of specialized cultivation that cannot be replicated by starting a US farm. Historically, most spices were duty-free; only items like Vietnamese garlic that directly compete with California crops were previously taxed.
— EthanThe tariff implementation day turned into a marketing win
When tariffs took effect, the company quickly assessed that spice ingredients represented a small portion of costs and financial impact was manageable. Within two days, it announced a tariff sale without raising retail prices or passing costs to farming partners—absorbing the expense itself. Consumers responded to this commitment. A single tariff-triggered sale generated approximately $250,000 in sales and gave the company free media coverage on supply-chain topics, a marketing win sustained for nearly two years.
— EthanBig companies avoid litigation; small businesses lead the fight
Nearly all tariff litigation plaintiffs are small businesses or individual Democratic state governments. The Fortune 500 companies spending billions annually on tariffs remain silent. Ethan's analysis: the government has threatened retaliation but never named specific companies or individuals to target; the company has no outside investors and is 100% spouse-owned, eliminating board-approval friction; and litigation generates positive PR for a media-driven business. Small companies can afford to sue; large companies cannot take the risk.
— EthanSection 301 has shifted from temporary negotiation lever to permanent tariff
Peter traces Section 301's historical use: roughly 130 invocations, all targeting a single country or specific EU trade practice as negotiating leverage (1980s Japan semiconductors, Trump's first term China IP disputes), with resolution via agreement or termination. This time, the USTR copy-pasted the same investigation text for all 60 economies and locked in permanent tariffs rather than negotiating an outcome. At trial, three judges questioned the government's argument that courts should defer to executive branch decisions.
— Peter HarrellForced labor is invoked as justification, but tariff rates don't reflect it
The stated legal basis is ‘countries failing to prevent forced-labor goods’. The tariff schedule assigns two flat rates: 10% if a country has a ban but enforcement is weak, 12.5% if there is no ban. China, universally recognized as the world's worst forced-labor offender, draws 12.5%—identical to two-thirds of other countries with no known forced-labor problem. The tariff structure bears no relationship to actual forced-labor reality in any nation.
— Peter HarrellEven a court victory means waiting 12-18 months for tariff refunds
Tariffs are direct CBP account debits with no negotiation room. Even if Burlap and Barrel wins at the Court of International Trade, the government historically continues collecting during appeals, which typically run 12 to 18 months and may escalate to the Federal Circuit or Supreme Court. Peter expects the next Democratic administration will likely cancel portions of these tariffs to fulfill ‘lower cost of living’ promises, but may preserve some as negotiating assets—so tariffs will not automatically disappear with regime change.
— Peter HarrellThe company lets farmers set prices and never negotiates down
The company uses farmer-set pricing: it almost never negotiates down because spice materials are a tiny cost component; the largest single cost is shipping from warehouse to consumer. Paying a dollar more per kilogram of spice barely affects margins but transforms a farmer's life. A longtime Guatemalan cardamom partner used his earnings to build a two-story house with running water—a threshold he had never reached before.
— EthanIn their own words · checked verbatim
Most spices don't grow in the US. You know, we're talking about the classics like black pepper or cinnamon or vanilla. You just can't grow them here. We mean, not yet, you know, like maybe in 10 years we'll have the climate for it, but we don't have the climate for it today.
Ethan10:33
We committed not to raise our prices to consumers, which we have followed through on in the almost two years since. And and not to cut our payments to partner farmers, not to ask our partner farmers to absorb the cost of the tariff.
Ethan21:23
To be honest, I don't really understand what everybody is scared of. Yes, okay, fine, retaliation from the president or others close to him, but actually it has not happened in any of the tariff cases at all.
Ethan29:50
But, you know, the big companies you would ordinarily expect to kind of be the lead plaintiffs on this sort of thing, because they're paying billions in tariffs. Yeah. I've just been sitting on the sidelines.
Peter Harrell33:02
China has a 12 and a half percent tariff. China is probably the biggest forced labor problem in the world. It has a 12 and a half percent tariff in the 12 and a half percent tariff. So do like two thirds of the other countries.
Peter Harrell45:36
Yeah, they just pull the money directly out of our bank account. By the way, we don't even write a check. We don't have the opportunity to, excuse me, to haggle or any, you know, like it just comes out direct deposit from our account straight to CBP, as it does for everybody.
Ethan47:41
Yeah, I mean, we pay, I don't track the commodity price that closely, but we pay farmers whatever they ask. We call it farmer led pricing. But essentially, we don't negotiate because the cost of the spice, as I said earlier, is a very small percentage of our total unit cost.
Ethan57:02
Figures
| Section 301 tariff rates | 10% or 12.5% | 3:03 |
| Historical uses of Section 301 | Approximately 130 | 38:15 |
| Economies covered by this round of Section 301 investigation | 60 (representing 99% of US trade) | 39:17 |
| IEEPA tariff refunds received by company | Low six figures, plus 3.5% interest | 23:30 |
| Expected appeal duration | 12 to 18 months | 47:41 |
| Direct-to-consumer sales as percentage of total | Approximately 70% | 19:18 |
| Countries from which company sources spices | Approximately 28 | 11:39 |
| Zanzibar black pepper cooperative annual purchase volume growth | From hundreds of kilograms to at least 5 tons | 12:46 |
Glossary
- Section 301
- Provision of the Trade Act of 1974 authorizing the government to impose tariffs in response to unfair foreign trade practices.
- IEEPA
- International Emergency Economic Powers Act; basis for Trump's initial tariff rounds, but ruled inapplicable to tariffs by the Supreme Court.
- Section 122
- Provision of the Trade Act of 1974 allowing the president to impose temporary tariffs (up to 150 days) due to balance-of-payments crises.
- Court of International Trade
- Federal court specializing in tariff and import-export trade disputes.
- amicus brief
- A written statement submitted to a court by a non-party to present legal argument or factual perspective.
How to listen
Anyone tracking US-China trade policy and tariff litigation, or managing small-business cross-border supply chains and go-to-market strategy.
15:00-20:00 discusses specific spice flavors and cooking tips; skip if you care only about tariff disputes.