New Section 301 Tariffs Demonstrate Rededication To U.S. Trade Policy

On July 24, 2026, the Trump Administration imposed new tariffs under Section 301 of the Trade Act of 1974, targeting imports from 60 countries due to alleged forced labor concerns. These tariffs, which range from 10%–12.5% depending on the country at issue, replaced the 10% temporary tariff imposed under Section 122 of the Trade Act of 1974, which expired on the same day. The new measures rest on substantially firmer legal footing than the tariffs imposed under the International Emergency Economic Powers Act (IEEPA) that the U.S. Supreme Court invalidated earlier this year. Companies should act now to map supply chain exposure and evaluate potential mitigation strategies.

Background: IEEPA and Section 122 tariffs

On February 20, 2026, the Supreme Court held in Learning Resources, Inc. v. Trump (consolidated with Trump v. V.O.S. Selections) that the IEEPA does not authorize the President to impose tariffs. The decision invalidated the IEEPA-based “fentanyl” tariffs on Canada, Mexico, and China as well as “reciprocal” tariffs on other trading partners. The Court of International Trade subsequently ordered U.S. Customs and Border Protection (CBP) to develop a process to issue refunds for IEEPA tariffs, which remains ongoing.

Within days of the Supreme Court’s ruling, the Trump Administration imposed a 10% global tariff under Section 122 of the Trade Act of 1974, styled as a temporary import surcharge to address balance-of-payments concerns. Section 122 permits such duties for up to 150 days without congressional extension. Congress did not extend the Section 122 tariff surcharge and it expired by its own terms at 12:01 am EDT on July 24, 2026.

New Section 301 tariffs

Immediately following the expiration of the Section 122 tariff, the Trump Administration imposed new Section 301 tariffs based on findings that 60 economies (representing more than 99% of U.S. imports) have failed to impose or effectively enforce prohibitions on goods produced with forced labor. The tariffs are structured in different tiers:

• Additional 10% tariff on top of the existing most-favored-nation base tariff rate and certain other applicable special duties: Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom.

• Additional 12.5% tariff on top of the existing most-favored-nation base tariff rate and certain other applicable special duties: Algeria, Angola, Australia, 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, Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Thailand, Turkey, United Arab Emirates, Uruguay, Venezuela, and Vietnam.

• Top-up to combined 10% tariff: European Union and Taiwan (combined most-favored-nation (MFN) tariff rate and Section 301 duty generally will not exceed 10%).

• Top-up to combined 12.5% tariff: Japan, Korea, and Switzerland (combined MFN tariff rate and Section 301 duty generally will not exceed 12.5%).

Exceptions and exclusions

There are numerous exceptions and exclusions from the new Section 301 tariffs, which importers should closely assess to determine whether their products qualify:

• Excluded products listed in Annexes: detailed lists of excluded products organized by Harmonized Tariff Schedule of the U.S. (HTSUS) code are included in the Annexes to the Federal Register notice, including certain agricultural products, aerospace inputs, and select metals (among other items).

• Goods imported from Canada and Mexico that comply with the U.S.-Mexico-Canada Agreement (USMCA).

• Goods covered by separate duties under Section 232 of the Trade Expansion Act of 1962 (e.g. certain steel or aluminum products and automobile parts, among other items).

• CAFTA-DR textiles and apparel: Certain articles entering duty-free from Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, or Nicaragua under the Dominican Republic-Central America-United States Free Trade Agreement.

Notably, the new Section 301 tariffs do not include a post-final, company-specific product exclusion process; the public comment period (closed July 6, 2026) was effectively the exclusion opportunity.

Tariff mitigation strategies

Importers who are affected by the new tariffs should assess whether well-established mitigation strategies might help reduce their exposure. These include, among others:

• Duty Drawback: CBP has confirmed that Section 301 duties are eligible for duty drawback recovery of up to 99% of duties paid on goods subsequently exported or destroyed. This is a potentially valuable tool, subject to standard documentation, HTSUS-matching, and five-year statute of limitations requirements.

• First Sale Rule: The first sale rule allows importers to calculate tariffs using the lower price of the first sale in a multi-tiered supply chain (such as from a non-U.S. factory to a non-U.S. intermediary) instead of the final sale price to the U.S. importer, subject to certain conditions. Qualifying first-sale transactions can significantly reduce the dutiable customs value and thereby lower the absolute dollar amount of tariffs owed. A proper bona fide sale structure and adequate documentation are required to withstand CBP scrutiny.

• Country-of-Origin/Substantial Transformation: Because the tariffs are determined at the country level, a country-of-origin analysis may allow a good to be considered the product of a non-covered or lower-tier country. However, shifting from one covered country to another covered country will not eliminate exposure; reclassification to an exempt origin (e.g. USMCA-qualifying production) would be most beneficial.

• Nairobi Protocol: Goods specially designed or adapted for the use of persons with disabilities, classified under HTSUS 9817.00.92–9817.00.96, are exempt from Section 301 and other tariffs. The scope, however, is narrow and limited to qualifying disability-related articles and is most relevant for medical device companies.

• HTSUS Reclassification: Because the new tariffs generally apply at the country level rather than by HTSUS product list, reclassification alone typically will not remove a product from scope. However, accurate HTSUS classification remains essential to confirm eligibility for Annex A exclusions or categorical carve-outs.

Additional takeaways

• Tariffs are here to stay. The progression from IEEPA to Section 122 to Section 301 reflects this administration’s determination to maintain tariff measures regardless of the specific legal vehicle. Unlike the IEEPA tariffs that the Supreme Court rejected, the new Section 301 actions involve investigation, notice-and-comment rulemaking, and reasoned decision-making—a traditional trade-remedy process designed to be more legally durable and resistant to judicial challenge. Companies should treat tariffs as a structural, durable feature of U.S. trade policy.

• More tariffs are coming. The Trump Administration separately initiated a Section 301 investigation on March 11, 2026, into “structural excess capacity and production in manufacturing sectors,” targeting 16 major economies (including China, the EU, Japan, Korea, India, and others) across sectors such as steel, semiconductors, electric vehicles, and chemicals. The comment docket closed April 15, 2026, and public hearings concluded in May. As of this writing, no final determination has been published—but a final action is expected in the near future, which likely will result in additional tariffs on imports from targeted countries. Numerous other investigations under Section 232 and other authorities remain pending and also are likely to result in additional tariffs on targeted countries/products.

• Proactive supply chain assessment is essential. Companies should prioritize mapping their import portfolios by HTS code and country of origin. It also is essential to consider the mitigation strategies discussed above to reduce tariff exposure.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.