On July 23, the Trump Administration announced a sweeping new Section 301 tariff action covering imports from 60 economies, including the European Union. Together, these economies account for approximately 99.4% of U.S. imports. The tariffs took effect at 12:01 a.m. Eastern time on July 24, immediately as the temporary 10% Section 122 surcharge that had been in place for the preceding 150 days expired.

The new tariffs generally fall into one of two categories: a 10% additional duty for trading partners that have adopted, partially adopted, or committed to adopt a forced-labor import prohibition, and a 12.5% additional duty for most other investigated economies. Five trading partners including the European Union, Taiwan, Japan, South Korea and Switzerland will receive separate treatment under which the new Section 301 duty is adjusted based on the product’s ordinary most-favored-nation, or MFN, tariff rate.

The Administration formally presents this action as a response to the failure of foreign governments to prohibit and effectively enforce bans on imports made with forced labor. However, the scope and timing of the action make it functionally much broader. The new Section 301 tariffs replace the expiring Section 122 surcharge with another nearly economy-wide tariff structure and preserve a broad tariff baseline following the invalidation of the Administration’s earlier IEEPA tariffs.

How Did We Get Here?

The Original IEEPA Tariffs

The current tariff sequence began on April 2, 2025, when President Trump invoked the International Emergency Economic Powers Act, or IEEPA, to impose a baseline 10% “reciprocal tariff” on imports from most U.S. trading partners, with higher country-specific rates for certain economies. The Administration argued that large and persistent U.S. trade deficits constituted an unusual and extraordinary threat to the national security and economy of the United States.

IEEPA had traditionally been used for sanctions, asset blocking and other emergency economic restrictions…not as a source of broad tariff authority. Indeed, the Supreme Court later observed that, during IEEPA’s nearly 50-year history, no previous president had invoked it to impose tariffs. On February 20, 2026, the Supreme Court held in Learning Resources, Inc. v. Trump that IEEPA does not authorize the President to impose tariffs. The Court concluded that IEEPA’s authorization to “regulate” importation did not clearly delegate Congress’s constitutional authority to impose tariffs and duties.

Section 122 Provides a Temporary Bridge

On the same day the Supreme Court rejected IEEPA as a source of tariff authority, the President announced that the Administration would impose a temporary surcharge under Section 122 of the Trade Act of 1974. Section 122 expressly authorizes the President to impose a temporary import surcharge of up to 15% to address large and serious U.S. balance-of-payments deficits or other fundamental international payments problems. The Administration imposed a broad 10% surcharge effective February 24, 2026.

The catch? Unless Congress extends the measure, a Section 122 surcharge may remain in effect for no more than 150 days. The February proclamation therefore provided that the 10% tariff would remain in effect through 12:01 a.m. Eastern time on July 24, 2026.

Section 122 consequently served as a temporary bridge while the Administration pursued other statutory authorities capable of supporting longer-term tariffs.

USTR Initiates the Forced-Labor Section 301 Investigations

On March 12, 2026, the Office of the U.S. Trade Representative initiated 60 separate Section 301 investigations concerning forced-labor import practices. The investigations examined whether the covered governments had failed to impose and effectively enforce prohibitions on the importation of goods produced wholly or partly with forced labor.

Unlike IEEPA, Section 301 of the Trade Act expressly authorizes the United States to respond to foreign acts, policies or practices that are unjustifiable, unreasonable or discriminatory and burden or restrict U.S. commerce. Section 301 also expressly authorizes the imposition of duties or other import restrictions following the required investigation and determination.

USTR held an initial round of hearings on April 28 and 29 and consulted with more than 45 of the governments covered by the investigations. On June 2, USTR determined that the practices of all 60 investigated economies were actionable under Section 301. USTR then proposed responsive tariffs, requested further public comments and held a second round of hearings from July 7 through July 9. Across the proceedings, USTR received more than 2,100 public submissions and heard testimony from more than 100 witnesses during the final hearings.

USTR announced its final tariff action on July 23, with the duties becoming effective at 12:01 a.m. the following morning.

The New Tariff Structure

The final action establishes a three-tier tariff system based on each country’s forced-labor enforcement efforts:

Tier 1: 10% Additional Tariff

Countries with strong forced-labor prohibitions

  • Applies to: Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom
  • Rationale: These countries have either adopted forced-labor import prohibitions, committed to adopt/enforce them through trade agreements, or established partial regimes to prevent forced-labor imports

Tier 2: Graduated Tariff Structure

Countries with moderate enforcement frameworks

European Union & Taiwan:

  • Combined MFN + Section 301 rate capped at 10%
  • If MFN tariff < 10%: Section 301 duty fills the gap
  • If MFN tariff ≥ 10%: No additional Section 301 duty

Japan, South Korea & Switzerland:

  • Combined MFN + Section 301 rate capped at 12.5%
  • Same graduated structure as EU/Taiwan, but with higher threshold

Tier 3: 12.5% Additional Tariff

Countries with limited or no forced-labor enforcement

  • Applies to: China, Australia, Brazil, Singapore, Thailand, Vietnam, and other investigated economies
  • Note: Subject to product-specific and country-specific exemptions

Effective Date and In-Transit Treatment

The duties apply to goods entered for consumption or withdrawn from warehouse for consumption on or after 12:01 a.m. Eastern time on July 24. A limited in-transit exception applies to goods that were loaded onto a vessel at the port of loading and already in transit on their final mode of transportation before the effective time. To qualify, those goods must be entered for consumption or withdrawn from the warehouse before 12:01 a.m. Eastern time on July 28.

The Tariffs Are Not Limited to Goods Made With Forced Labor

One of the most significant aspects of the final action is that the tariffs do not apply only to shipments that have been connected to forced labor. The investigated practice is each foreign government’s alleged failure to enact or effectively enforce an import prohibition and not the conduct of an individual foreign producer or U.S. importer. Section 301 permits USTR to impose duties on goods or economic sectors regardless of whether those particular goods were involved in the practice under investigation. The final action therefore applies broadly to most imports from the covered economies, subject to the exemptions established in the notice.

As a result, demonstrating that a particular company’s supply chain is free from forced labor does not, by itself, exempt its imports from the new tariff. Forced labor was only the auspices for implementing across the board, economy wide, tariffs.

Product and Country Exemptions

The final action includes extensive exemptions contained in Annexes I and II of USTR’s notice. According to USTR, the exempted products include:

  • Raw materials that could become unavailable domestically if subjected to the tariffs;
  • Products for which tariffs could create broader economic disruptions;
  • Goods that cannot be grown or produced domestically in sufficient quantities or obtained from other sources;
  • Products for which tariffs may not effectively advance the objectives of the investigation; and
  • Certain products are exempted to encourage trading partners to implement their forced-labor commitments.

Two broader exemptions are particularly important. First, articles and parts of articles that are subject to Section 232 tariffs are generally exempt from the new forced-labor tariffs. This includes covered products in sectors such as metals, vehicles and vehicle parts, wood products, and semiconductors.

Second, goods from Canada and Mexico that qualify to enter free of duty under the United States-Mexico-Canada Agreement (USMCA) are exempt from the new 10% Section 301 tariff. Accordingly, the announced 10% rates for Canada and Mexico should not be read as applying to every import from those countries.

Interaction With Existing Section 301 Tariffs

The new forced-labor tariffs represent a completely separate Section 301 investigation from the legacy China Section 301 action first imposed in 2018. This separation has important implications for importers, as these tariffs can stack on top of existing trade measures.

Under the new framework (U.S. Note 52 to Chapter 99 of the HTSUS), products subject to forced-labor tariffs remain liable for their ordinary duty rates, plus any other applicable additional duties, antidumping duties, countervailing duties, taxes, and fees. This means a single Chinese product could face multiple layers of tariffs: the new 12.5% forced-labor tariff, existing China Section 301 duties, and any applicable AD/CVD measures.

Critically, exemptions from one action do not carry over to the other. The legacy China Section 301 exclusions operate through specific HTSUS headings (9903.88.69 and 9903.88.70) and U.S. Note 20, while the forced-labor action uses entirely separate headings and U.S. Note 52 with its own exemption structure in Annexes I and II. Importers must therefore conduct separate analyses to determine eligibility for exemptions under each action, even if their products are already excluded from China Section 301 tariffs.

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The Administration has moved through three distinct legal frameworks in less than 18 months. IEEPA provided the original basis for the broad reciprocal tariff program, but the Supreme Court held that the statute did not authorize presidential tariffs. Section 122 then provided a temporary, 150-day bridge. The new Section 301 action took effect at the exact moment that bridge expired, preserving a broad tariff baseline under a statute that expressly authorizes duties following an investigation into foreign trade practices.

If you or your company has specific questions on your HTS codes please reach out to our team.