To account for the automatic expiration of the global tariff imposed under Section 122, the United States Trade Representative (USTR) has implemented tariffs on 60 economies for failing to impose or effectively enforce an import prohibition on goods produced with forced labor. Subject to exceptions, imports from countries that fail to impose a forced labor prohibition will be subject to a 12.5 percent tariff, while imports from countries that impose such a prohibition but fail to effectively enforce it will be subject to a 10 percent tariff. These tariffs go into effect after 12:01 a.m. ET on July 24, 2026, and will remain in place indefinitely absent subsequent amendment. Importers must evaluate their exposure under this latest action.
Tariff Rates by Country
The tariffs were imposed under two distinct structures: the standard structure and the most-favored-nation (MFN) structure.
Standard Structure
Under the standard structure, the new Section 301 tariff will apply in addition to the MFN rate of the particular imported item.
- The countries subject to a 10 percent tariff under the standard structure are Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom.
- The countries subject to a 12.5 percent tariff under the standard structure are Algeria, Angola, Australia, the Bahamas, Bahrain, Brazil, Chile, China, Colombia, Costa Rica, Dominican Republic, Egypt, Guyana, Hong Kong, Iraq, Israel, Kazakhstan, Kuwait, Libya, Morocco, New Zealand, Nicaragua, Nigeria, Norway, Oman, Peru, the Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Thailand, Türkiye, the United Arab Emirates, Uruguay, Venezuela, and Vietnam.
Most-Favored-Nation (MFN) Structure
Under the MFN structure, the new Section 301 tariff will apply in two ways. Where a product's MFN tariff is less than 10 or 12.5 percent, depending on the country, the sum of the MFN tariff and the Section 301 tariff will equal 10 or 12.5 percent. Where a product's MFN tariff is greater than or equal to 10 or 12.5 percent, the Section 301 tariff will be zero.
Effectively, this means that, in most cases, the combined tariff will not exceed 10 or 12.5 percent for these items. This structure mirrors the one implemented under the Framework Agreements imposed pursuant to the International Emergency Economic Powers Act (IEEPA).
- The economies subject to a 10 percent tariff under the MFN structure are the Member States of the European Union and Taiwan.
- The countries subject to a 12.5 percent tariff under the MFN structure are Japan, Korea, and Switzerland.
Exemptions
There are key exemptions for importers. These largely match those available under the IEEPA and Section 122 tariffs, but new exemptions are available in certain cases. Importers must validate their supply chains against this new structure. Generalized categories of exemptions include the following:
- General Exemptions: Items classified under certain enumerated tariff subheadings listed in Note 52(b).
- Agricultural Products: Certain tropical agricultural products.
- Civil Aircraft: Civil aircraft (all aircraft other than military aircraft); their engines, parts, and components; other parts, components, and subassemblies; and ground flight simulators and their parts and components, classified under certain enumerated tariff subheadings.
- Pharmaceuticals: Articles for use in pharmaceutical applications classified under certain enumerated tariff subheadings.
- Section 232: Articles subject to Section 232 duties on steel, aluminum, copper, automobiles and parts, medium- and heavy-duty vehicles and parts, lumber products, and semiconductor articles.
- USMCA: Articles of Canada and Mexico entered free of duty under the United States-Mexico-Canada Agreement.
- DR-CAFTA: Textile or apparel goods that are products of Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, or Nicaragua entered free of duty under the Dominican Republic-Central America-United States Free Trade Agreement.
Beyond these exemptions, the new action also provides country-specific exemptions for economies that have concluded an Agreement on Reciprocal Trade (ART) or similar arrangement with the United States. Each such country has a specific list of Harmonized Tariff Schedule (HTS) codes under which the new tariff will not apply, provided the item is both classified under one of those codes and originates from that country. These countries include:
- The United Kingdom; member states of the European Union; Switzerland; Malaysia; Cambodia; Guatemala; El Salvador; Argentina; Bangladesh; Taiwan; Indonesia; Ecuador; and Jordan.
These exemptions include specific rules for textile and apparel goods of (i) Jordan, and (ii) El Salvador or Guatemala entered free of duty under DR-CAFTA.
Other Key Provisions
- In-Transit Exception: While the new tariffs apply to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. ET on July 24, 2026, goods already loaded on a vessel and in transit on their final mode of transport before that time are excepted, provided they are entered for consumption before 12:01 a.m. ET on July 28, 2026.
- Textile/Apparel Tariff-Rate Quota (TRQ) Mechanism: For Bangladesh, Cambodia, Indonesia, and Malaysia, USTR will establish tariff-rate quotas (initial three-year term) tied to each country's importation of U.S. cotton and textile inputs, allowing a set volume of textile and apparel goods to enter free of the Section 301 tariff once each TRQ is operational. Until then, the standard 10 percent rate applies to the textile and apparel goods that will eventually be covered.
- Foreign Trade Zones: Goods of a tariffed economy admitted into a U.S. foreign trade zone (FTZ) must be admitted under "privileged foreign status," which means FTZs are not available for relief.
What This Means for You
Given the breadth of these changes, importers should promptly review their sourcing and supply chains to confirm whether their goods fall within an applicable exemption or country-specific ART carve-out.
Baker Donelson's International Trade and National Security Team will continue to monitor developments and provide updates as warranted. If you have any questions or would like to discuss this in further detail, please reach out to P. Lee Smith, Matthew McGee, or any member of the team.