A little-used provision of federal trade law is moving into its next phase as the U.S. lamb industry asks the federal government to intervene in a market increasingly dominated by imports from Australia and New Zealand.
The American Sheep Industry Association, based in Colorado, has worked toward the investigation for several years, arguing that rising imports and lower-priced foreign lamb have contributed to a contraction of the domestic industry.
“Our goal at ASI is to be the voice for the producer, and we see this as a once-in-a-lifetime opportunity to put a little more money in producers’ pockets and to put resources into education and direct marketing of lamb,” said ASI President Ben Lehfeldt, a fifth-generation sheep rancher.
At the center of the case is a six-month investigation by the U.S. International Trade Commission into whether increased lamb imports are a “substantial cause of serious injury” to the domestic industry, a high legal threshold under Sections 201 and 202 of the Trade Act of 1974.
Representing ASI is international trade and government relations lawyer Paul Rosenthal, chair of Kelley Drye. Rosenthal said the case will turn not simply on whether the domestic sheep industry has struggled, but on whether the evidence establishes the required connection between injury and increased imports. “This is not a closed case,” he said.
ASI represents 42 state associations and more than 100,000 U.S. sheep farms and ranches. The organization filed its safeguard petition with the U.S. Trade Representative in October 2025. USTR recommended that the ITC initiate the investigation in July.
The ITC will hold a hearing Oct. 16 on whether the serious-injury standard has been met. If the commission makes an affirmative determination, the proceeding will move into a second phase, addressing what remedy, if any, should be recommended to the U.S. president.
The remedy phase is expected to include a hearing in early December. After the commission completes its investigation and makes a recommendation, the president will have 60 days to decide how to proceed.
“He has basically total discretion about what to do on the remedy,” Rosenthal said. The administration could adopt the recommendation, reject relief altogether or impose stronger relief, among potential outcomes.
A Demanding Standard
A Section 201 safeguard case focuses on whether increased imports are a substantial cause or threat of serious injury to a domestic industry. For the sheep industry, Rosenthal said, the evidence includes import penetration, import volumes and pricing.
The numbers have changed dramatically since ASI pursued an earlier trade case in 1999. At that time, imports accounted for about 30% of the domestic lamb market, Rosenthal said. Today, imports account for about 70%.
ASI reported this year that U.S. lamb imports rose from 213.6 million pounds in 2020 to 309.3 million pounds in 2024, an increase of nearly 45%. Imported lamb sells at an average of 10.8% below domestic product.
Lehfeldt noted producers have struggled to compete for space in grocery stores because retailers can obtain imported lamb at a lower wholesale cost. “The American Lamb Board has done a very good job promoting lamb, but we’ve had a hard time getting American lamb next to imported lamb in the meat case, where the consumer can make that choice,” he said.
Rosenthal said the commission will also examine the consequences of the industry’s contraction, including processors leaving the business, farms and ranches going out of business, employment losses and declining domestic production.
Those losses are particularly significant because of the structure of the lamb industry. When processors close, sheep producers can lose the ability to sell their animals altogether. Rosenthal said, “There’s no future for them if the processors get driven out of business.”
A Question of Causation
At the hearing in October, Rosenthal said the industry will present evidence that customers chose imported lamb because it was less expensive. “You’ll see that there are many, many examples where the customers have said, ‘We won’t buy your lamb because we can get a better price from the imports,’” he said.
ASI also points to what it sees as a continuing inability to recover from the earlier trade dispute. When the association sought import relief in 1999, the relief was interrupted and never fully implemented, following a World Trade Organization ruling, according to Rosenthal. In his view, the domestic industry did not receive the period of protection required to rebuild.
The purpose of a safeguard, he said, is not to permanently shut foreign competitors out of the U.S. market. Rather, it is intended to give a domestic industry time to adjust and become competitive.
For sheep producers this time around, that could mean using additional revenue to grow flocks and invest in more efficient production and processing equipment.
ASI is seeking a tariff-rate quota as its preferred remedy. Under such a system, imports would continue entering the United States up to a specified level at a certain tariff rate. Once imports exceed that level, a substantially higher tariff would apply.
“What we want is a remedy that will increase the tariffs on the imports to make the U.S. industry more competitive with the imports, but not block the imports from coming in altogether,” Rosenthal said.