On July 23, 2026, the Office of the U.S. Trade Representative (USTR) announced final and immediate new tariffs on imports from 60 economies (59 countries and the European Union), including nearly all of the United States’ largest trading partners. The duties are imposed under Section 301 of the Trade Act of 1974 and are tied to USTR’s assessment of measures these economies have taken to adopt and enforce prohibitions on the importation of goods made with forced labor. These “Forced Labor” Section 301 duties apply to products entered for consumption on or after 12:01 a.m. ET on July 24, 2026. However, in-transit goods that have been loaded onto a vessel at the port of loading and in transit on the final mode of transit before 12:01 a.m. ET on July 24, 2026, and entered for consumption or withdrawn from warehouse for consumption before 12:01 a.m. ET on July 28, 2026, are not subject to the new tariffs.
Background
The new Section 301 tariffs take effect at the same time that the temporary 10 percent global tariff imposed under Section 122 of the Trade Act expired at the end of the day on July 23. The Section 122 tariff had itself been a temporary tariff following the Supreme Court’s February 2026 decision invalidating the prior tariffs imposed under the International Emergency Economic Powers Act (IEEPA). By implementing the new tariffs under Section 301, the administration is relying on a tariff authority that has been upheld by US courts in previous challenges.
The new Section 301 tariffs are the result of a months-long investigation process. USTR initiated the investigation into the 60 economies on March 12, 2026, issued its initial findings in early June, and invited public comments on the findings and the proposed implementation of tariffs. The agency received more than 1,600 written comments in addition to public testimony delivered at a three-day hearing in early July, including evidence and witness statements from foreign governments, industry groups, domestic producers, and non-governmental organizations. In less than a month, USTR then released this final determination.
Section 301 Tariff Structure
Headline Rates: The Forced Labor Section 301 tariffs fall into two headline rates: 10 percent and 12.5 percent. A 10 percent rate applies to economies that purportedly maintain a forced labor import prohibition, have committed to adopt and enforce one through an Agreement on Reciprocal Trade (ART), or have put in place a partial regime that blocks certain forced labor goods.
The countries subject to a flat 10 percent tariff include: Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom. A higher 12.5 percent rate applies to all other investigated economies. Notably, several economies that the June 2026 determination had slated for 12.5 percent duties reduced their exposure to the flat 10 percent tariff by adopting forced labor import prohibitions or ART commitments after the June proposal, including Cambodia, Guatemala, Honduras, India, Sri Lanka, Trinidad and Tobago, and Jordan.
Capped Rates for Select Countries: For several economies the new Section 301 tariff is a capped rate, calculated net of the most-favored-nation (MFN) rate. For products of the European Union and Taiwan, USTR will impose a Section 301 duty so that the combined MFN and Section 301 rate reaches 10 percent, dropping the Section 301 tariff to zero for articles subject to an MFN rate that is 10 percent or higher. The same mechanism applies to Japan, Korea, and Switzerland at a 12.5 percent cap.
Product Exemptions: USTR has provided a large number of exemptions for products whose exclusion would threaten domestic supply, trigger broader economic disruption, or that are unrelated to the policies targeted by the forced labor investigations. A full list of exempted products, many of which are economy-specific, is set forth in the Annexes to the notice. Additionally, products already subject to sectoral tariffs under Section 232 of the Trade Expansion Act, such as articles of steel and aluminum, semiconductors and critical minerals, and timber, lumber and wood products, are excluded. Goods for which entry is properly claimed under a provision of Chapter 98 of the Harmonized Tariff Schedule are also mostly exempt if U.S. Customs and Border Protection agrees that such entry is appropriate. Qualifying goods of Canada and Mexico entered free of duty under the United States-Mexico-Canada Agreement (USMCA) are also not subject to the new duties.
New Textiles Mechanism: USTR also introduced a tariff-rate quota (TRQ) mechanism for textiles of Bangladeshi, Cambodian, Indonesian, and Malaysian origin. The TRQs, which are to have an initial three-year duration once USTR determines they are feasible, would allow a defined volume of apparel and textile goods from those economies to enter free of the Section 301 duty, calibrated to each economy’s purchases of U.S. cotton and textile inputs. The stated aim is to steer sourcing toward U.S. inputs and away from materials more likely to be implicated by supply chains suspected to involve forced labor. Until the quotas are formalized, the applicable Section 301 duty (10 percent for these countries) will apply to the covered textile and apparel goods.
Looking Ahead
USTR has signaled that additional Section 301 actions are moving forward, including a broader investigation into manufacturing overcapacity that could result in additional tariffs on products of China, the European Union, Indonesia, Korea, Vietnam, Mexico, Japan, and India, as well as a probe into pharmaceutical pricing practices abroad. A separate year-long investigation into Brazil has already concluded with new 25 percent Section 301 tariffs on many Brazilian goods that took effect on July 22, subject to certain carveouts.
Importers should:
- Map their supply chains against the 10 percent and 12.5 percent country lists and confirm whether any net-of-MFN calculations apply;
- Assess eligibility for the exemptions, including Section 232, USMCA, and raw-material carveouts, at the HTS line level;
- Evaluate the in-transit rule, which spares shipments loaded and in transit before the effective date and entered into the United States or withdrawn from warehouse before July 28, 2026;
- Revisit contractual provisions allocating duty costs and any force majeure or price-adjustment provisions; and
- Monitor the pending overcapacity and other Section 301 investigations, which may materially expand exposure.
Businesses should expect an ongoing trade actions over the coming months, including the imposition of new or expanded tariffs and/or negotiated agreements between the United States and its trading partners. We continue to monitor developments and assess their impact on our clients’ operations.
