USTR Imposes New Section 301 Forced Labor Tariffs On Imports From 60 Economies

On July 23, 2026, the Office of the United States Trade Representative (USTR) announced final action in its Section 301 investigations concerning the failure of 60 economies to impose and effectively enforce prohibitions on imports produced with forced labor. The new Section 301 tariffs took effect at 12:01 a.m. EDT on July 24, 2026, immediately following the expiration of the temporary Section 122 duties. The new duties range from 10% to 12.5%, subject to numerous product-specific and country-specific exclusions. USTR stated that the affected economies account for approximately 99.4% of U.S. imports.

An “on-the-water” exemption applies to goods that were loaded onto a vessel at the port of loading and were in transit on the final mode of transportation before 12:01 a.m. EDT on July 24, 2026. To qualify, the goods must be entered for consumption, or withdrawn from warehouse for consumption, before 12:01 a.m. EDT on July 28, 2026.

Products already covered by Section 232 duties, including steel, aluminum, copper and their derivative products; automobiles, automotive parts, and derivative products; medium/heavy-duty vehicles and parts; buses; and timber, lumber, and derivatives, are specifically excluded from the scope of the forced labor Section 301 action.

New Tariff Structure

The new tariff regime applies to imports from 60 economies. USTR adopted different duty structures based on whether the economy has imposed, committed to impose and enforce, or partially implemented a forced labor import prohibition.

10% Plus MFN Rate

Imports from Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom are generally subject to an additional 10% Section 301 duty, which stacks on applicable Most-Favored-Nation (MFN) duties.

Higher of 10% or MFN Rate

For the European Union and Taiwan, the applicable Section 301 duty is structured as the higher of 10% or the applicable MFN duty rate. As a result, products with an MFN rate of 10% or higher generally are not subject to an additional duty beyond the existing MFN rate, while products with an MFN rate below 10% are subject to a 10% duty.

12.5% Plus MFN Rate

Imports from Algeria, Angola, Australia, the Bahamas, Bahrain, Brazil, Chile, China, Colombia, Costa Rica, the 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 are generally subject to an additional 12.5% Section 301 duty, which stacks on to applicable MFN duties.

Higher of 12.5% or MFN Rate

For Japan, South Korea, and Switzerland, the applicable Section 301 duty is structured as the higher of 12.5% or the applicable MFN duty rate. Products with an MFN rate of 12.5% or higher generally are not subject to additional duties beyond the existing MFN rate, while products with an MFN rate below 12.5% are subject to a 12.5% duty.

Changes From the June Proposal

The final action differs in several important respects from the tariff regime USTR proposed in June 2026. USTR retained the basic two-tier framework, generally applying lower tariff rates to economies that have adopted or committed to adopt forced labor import prohibitions and higher rates to those that have not. However, the final action modifies the treatment of several major trading partners. In particular, imports from the European Union and Taiwan are now subject to a “higher of 10% or the applicable MFN rate” methodology, while imports from Japan, South Korea, and Switzerland are subject to a “higher of 12.5% or the applicable MFN rate” methodology. In June, USTR proposed applying 10% or 12.5% additional duties more broadly, subject to exclusions.

USTR also expanded and refined the exclusion framework; added several country-specific product carveouts, confirmed exemptions for certain products under existing trade agreements; established textile-related tariff rate quotas (TRQs) for Bangladesh, Cambodia, Indonesia, and Malaysia; and provided additional detail regarding future textile mechanisms.

Product- and Country-Specific Exclusions

The following categories are not covered by the action: informational materials, donations, and accompanied baggage.

USTR also adopted extensive HTSUS-specific exclusions in the Annexes to the Federal Register notice, which explain that these exclusions cover products falling into several categories, including raw materials that could become unavailable domestically if subject to added duties; products whose coverage could cause economy-wide disruptions; products that cannot be grown or produced in sufficient quantities in the United States or obtained from other sources; products for which additional tariffs may not substantially contribute to eliminating the actionable conduct; and certain products where exclusions may encourage trading partners to enact and effectively enforce forced labor import prohibitions.

These exclusions specifically include crude oil and petroleum products; natural gas and liquified natural gas; coal and coke products; petrochemical feedstocks; coffee; cocoa and cocoa products; bananas; fruits and nuts; seafood and fish products; agricultural commodities not produced in sufficient quantities in the United States; copper and copper materials; lithium; cobalt; nickel; rare earth materials; manganese, zinc, and other critical mineral inputs; pharmaceuticals and active pharmaceutical ingredients (APIs); vaccines, medical devices, and other healthcare products; semiconductors and semiconductor manufacturing inputs; aerospace products, aircraft, engines, and components; industrial chemicals, resins, plastics feedstocks, and specialty manufacturing inputs.

USTR’s final action also includes several exceptions:

• Products of Canada and Mexico that qualify under the United States-Mexico-Canada Agreement (USMCA);
• Textile and apparel goods that qualify under the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA);
• Textiles, apparel, and travel goods from Jordan; and
• Certain agricultural products and goods specifically designed or adapted for the use or benefit of persons with disabilities which qualify under the Harmonized Tariff Schedule Chapter 98 provisions.

TRQs are to be set for Bangladesh, Cambodia, Indonesia, and Malaysia for an initial three-year period. USTR stated that these TRQs are intended to encourage those economies to use U.S. cotton and textile goods and reduce reliance on inputs from sources that USTR considers more likely to contain forced labor inputs.

Interaction with Other Duties

The new Section 301 forced labor duties apply in addition to ordinary customs duties and may be imposed alongside other trade remedies, unless an exclusion is available. For example, goods subject to antidumping or countervailing duties, existing Section 301 duties on most products of China, or Section 301 on products of Brazil may also be subject to the new forced labor Section 301 tariffs. The USTR will also announce the results of its Section 301 investigation into 15 countries and the EU on structural excess capacity and production in manufacturing sectors. The results of that investigation may raise tariffs further for covered countries.

If the Section 338 tariffs on certain products of Canada take effect on August 19, 2026, those duties would apply in addition to the new 301 tariffs. However, products and parts subject to Section 232 tariffs are expressly excluded from the new forced labor Section 301 action. Accordingly, product classification may have a greater impact on duty calculations, given the increased focus on trade enforcement.

The action provides that covered goods admitted into a U.S. foreign trade zone must be admitted in privileged foreign status and will be subject to the applicable Section 301 duties when entered for consumption.

Takeaways

The new Section 301 action may impact supply chains across most major U.S. import sectors. Stakeholders may wish to evaluate country-of-origin exposure; confirm product classifications; assess exclusion eligibility; and determine whether imports qualify for USMCA, DR-CAFTA, Jordan-related, or textile-specific treatment. Although the headline rates stand at 10% and 12.5%, the true commercial impact may depend on the interaction among country of origin, MFN duty rate, HTSUS classification, Chapter 99 exclusions, trade agreement qualification, and other trade remedy measures.

Importers should not assume that all goods from covered economies are subject to the new duties. The Annexes include broad exclusions for Section 232-covered goods and targeted exclusions for certain countries and products. Stakeholders also should not assume that a product falls within an exclusion based on general sector descriptions alone. The controlling analysis will turn on the specific product classification, country of origin, and applicable Chapter 99 provision.