A Temporary Tariff Just Became a Sweeping One
The US just traded a short-term tariff for a much bigger, longer-lasting one.
The new Section 301 duties took effect July 24, 2026, replacing the temporary 10% Section 122 tariff. That tariff took effect February 24, 2026, and generally could only last 150 days.
Rates vary by trading partner: the border levy generally comes to 10% or 12.5% of the value of goods, subject to caps and exemptions.
They apply to 60 trading partners that together supply approximately 99.4% of everything the United States imports.
The move marks a major expansion of Section 301. Earlier US trade penalties often targeted specific practices in specific countries, while this action reaches nearly all imports and stacks on top of existing anti-dumping and countervailing duties. The previous Section 122 tariff was always meant to be temporary, but the new Section 301 duties are built for the long haul.
The Forced-Labor Rationale
The official reason is forced labor. The US Trade Representative's office, known as USTR, says these countries did not impose or enforce bans on imports made with forced labor.
No one has to prove a specific product is tainted - a country's overall record is enough. The timeline moved fast.
USTR launched its Section 301 investigation on March 12, 2026, after President Trump directed it. The agency held public hearings in April and consulted more than 45 affected governments.
It concluded on June 2 that the practices were open to trade penalties.
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Then came more than 1,600 written comments and testimony from over 100 witnesses at a July hearing.
Rates, Caps, and Exemptions
The 10% rate generally applies to a long list of countries, including Canada, Mexico, India, Bangladesh, and the United Kingdom.
Most goods from other investigated economies face the 12.5% rate.
Some partners get a cap. For the European Union and Taiwan, the combined normal duty plus Section 301 charge generally cannot go above 10%.
For Japan, Korea, and Switzerland, the ceiling is 12.5%. If the normal duty already hits that ceiling, no extra charge applies.
Exemptions are broad. Steel, aluminum, automobiles, auto parts, copper, and other products covered by Section 232 national security rules are out.
So are USMCA-qualifying goods from Canada and Mexico (USMCA is the North American trade deal). Raw materials, energy products, and agricultural goods are out too.
There is a short grace period for goods already at sea. Shipments on a vessel before 12:01 am ET on July 24 skip the new duties if they clear customs by 12:01 am ET on July 28.
Textiles get their own track. USTR has orders to create tariff-rate quotas for Bangladesh, Cambodia, Indonesia, and Malaysia - limits that let a set amount of fabric in at lower rates - to encourage US cotton purchases.
Those quotas may be ready by September 1, 2026. Until then, those imports stay under the 10% tariff.
The Legal Fight and Your Portfolio
Two lawsuits are already at the Court of International Trade. In a proposed class action, Collective Horology LLC and Burlap and Barrel Inc., which had previously contested the earlier Section 122 tariffs, argue that USTR did not adequately explain "near-uniform duties across 60 economies with materially different enforcement records and trade profiles."
A second case, from seven businesses including Learning Resources Inc. and hand2mind Inc., calls the forced-labor rationale a pretext for "essentially the same set of sweeping global tariffs" the Supreme Court previously rejected when it invalidated the administration's IEEPA tariffs.
For your money, the key question is who pays. Importers hand over the duty, and that cost tends to travel - into higher prices, thinner profit margins, or both.
Companies that rely heavily on imports from the 60 listed countries could feel more pressure than rivals buying closer to home. USTR is telling importers to verify product rates and exemptions, update customs systems, and review contracts.
The tariffs are in place, so the size of the hit depends on what a company imports and where it buys from.
Either way, the border tax is now part of the math for nearly all imports, and that math could shift as the lawsuits move forward.
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