Double-Digit Section 301 Tariffs Hit Imports from 60 Economies

Effective July 24, 2026, the U.S. is implementing a new two-tiered global Section 301 tariff regime on 60 economies, calibrated to each jurisdiction’s/region’s policies and laws aimed at preventing the importation of goods made with forced labor. These new tariffs replace the temporary Section 122 tariffs that expired on the same date (for prior coverage of the Section 122 tariffs, see the trade alert, U.S. Court of International Trade Invalidates Section 122 Tariffs, dated May 12, 2026). 

On July 23, the Office of the U.S. Trade Representative (USTR) announced the results of a sweeping global investigation conducted under Section 301 of the Trade Act of 1974 (for prior coverage, see the trade alert, USTR Announces Major Section 301 Developments Involving Brazil, Vietnam and Forced Labor Enforcement, dated June 5, 2026). This unprecedented inquiry — covering 60 economies across every major region — concluded that these economies have either failed to adopt a prohibition on the importation of goods produced with forced labor or have not effectively enforced laws already enacted. As a result, the U.S. is imposing additional ad valorem duties on nearly all products originating from these economies, effective for goods entered or withdrawn from a warehouse on or after 12:01 a.m. eastern daylight time (EDT) on July 24, 2026. 

This action — which, according to a fact sheet released by USTR, will cover 99.4% of U.S. imports and apply to the country’s top trading partners — marks a significant escalation in the use of trade remedy laws to further the Trump administration’s goal of re-shoring manufacturing to the U.S. and reforming global labor laws. For companies sourcing from any of the affected areas, these new duties will compound existing tariff exposure and require an immediate reassessment of supply chain compliance, risk management, and sourcing strategies.

The new Section 301 tariffs are the third set of tariffs announced by the Trump administration this week. The administration announced on July 20 that a 50% tariff under Section 338 will be imposed on certain Canadian goods in response to perceived “discriminatory” trade measures from Canada; and an additional 25% ad valorem duty is being levied under Section 301 on a substantial volume of imports from Brazil (see the trade alert, First-Ever Section 338 Tariffs and New Aluminum and Defense Supply-Chain Controls: What Businesses Need to Know, dated July 23, 2026 and the trade alert, USTR Announces New 25% Tariffs on Brazilian Imports Following Section 301 Investigation, dated July 24, 2026).

Understanding the "FLIP" 301 Investigation

The Forced Labor Import Policies (FLIP) investigation launched on March 12, 2026 examined whether major U.S. trading partners maintain and enforce effective bans on the importation of goods made with forced labor. USTR determined that widespread gaps — ranging from the absence of statutory prohibitions to weak enforcement mechanisms — are unreasonable practices that burden U.S. commerce by enabling forced labor goods to circulate globally and enter U.S. supply chains directly.

To address these findings, the Trump administration established a two-tiered tariff structure based on each economy's demonstrated commitment to labor standards:

• 10% tariff - Applied to economies that have already imposed a forced labor import prohibition or have committed to do so through an Agreement on Reciprocal Trade. Covered economies include Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, the U.K., and Trinidad and Tobago; and
• 12.5% tariff - Applied to economies that have not yet met these criteria, including Brazil, China, EU, Japan, South Korea, Switzerland, Taiwan, and others among the 60 investigated nations/regions.

USTR emphasized that tariff rates may be adjusted as economies adopt or strengthen forced labor import bans, creating an incentive structure for rapid policy reform.

Exemptions and Strategic Carve-Outs

To mitigate unintended disruptions to U.S. supply chains, USTR has provided targeted exemptions detailed in Annexes I and II of the Notice. These carve-outs generally include:

• Raw materials - Inputs essential to U.S. manufacturing where domestic or alternative sources are insufficient;
• Existing trade remedies - Articles already subject to Section 232 duties (e.g., steel, aluminum, etc.), which are typically exempt from additional Section 301 duties to avoid duplication;
• Consumer essentials - Select agricultural products and humanitarian donations; and
• Informational materials - Books, news media, and artwork, which remain exempt.

Compliance and Logistical Deadlines

As noted above, the new duties apply to products entered for consumption on or after July 24, 2026. However, a limited "in-transit" provision offers short-term relief:

• Qualifying criteria - Goods must have been loaded onto a vessel and in transit on their final mode of transport before 12:01 a.m. EDT on July 24; and
• Entry deadline - These goods must be entered into the U.S. before 12:01 a.m. EDT on July 28, 2026, to avoid the additional duty.

This narrow window requires immediate coordination with logistics providers and customs brokers.

Practical Considerations for Companies

Companies with exposure to sourcing from any of the 60 affected economies should take immediate steps to mitigate financial and regulatory risks:

• Audit total duty exposure - Assess the combined impact of existing tariffs (including Sections 301 and 232 and anti-dumping and countervailing duties) alongside the new FLIP-related duties. For certain sectors, cumulative tariff rates may materially alter landed cost structures;
• Prioritize in-transit entries - Work closely with customs brokers to ensure all qualifying shipments arriving over the weekend are entered before the July 28 deadline;
• Review supply chain labor policies - USTR has signaled that tariff rates could be reduced from 12.5% to 10% if economies enter into a Reciprocal Trade Agreement or implement robust forced labor bans. Companies should monitor bilateral and multilateral diplomatic developments and/or negotiations for potential relief;
• Evaluate sourcing diversification - With new duties affecting a broad range of products and countries/regions, companies may need to reassess the economic viability of existing supply chains and accelerate diversification strategies; and
• Strengthen forced labor due diligence: Although these duties target foreign governments rather than individual importers, the policy reinforces the broader U.S. enforcement environment around forced labor. Companies should ensure that supplier audits, traceability systems, and compliance documentation are current.