USTR finalizes sweeping Section 301 tariffs targeting imports from 60 economies over failure to impose and enforce forced labor import prohibitions

Overview

On July 23, 2026, the U.S. Trade Representative (USTR) issued its final notice of action (Final Notice) concluding 60 Section 301 investigations into whether foreign economies have failed to impose or effectively enforce prohibitions on the importation of goods produced with forced labor.[1] Acting under Section 301 of the Trade Act of 1974 and at the specific direction of the president, USTR determined that each investigated economy engaged in acts, policies, or practices that burden or restrict U.S. commerce and announced the imposition of additional ad valorem duties on imports from those economies, subject to specified product and economy exemptions. The 60 economies account for more than 99% of U.S. imports.

The additional duties became effective on July 24, 2026, subject to a limited in-transit exception for goods already loaded for shipment before the effective date. The Final Notice follows USTR's initial June 2026 proposal, more than 1,600 public comments, and three days of public hearings.

Section 301 tariff action

Under Section 301, the U.S. government imposed a two-tier tariff structure applicable to virtually all products of the 60 investigated economies unless specifically exempted.

10% tier

Economies that USTR determined have prohibited forced-labor imports, have committed to do so through an agreement on reciprocal trade (ART), or maintain a comparable regime designed to prevent the importation of certain forced-labor goods are subject to an additional 10% duty. Such economies 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.

Certain economies otherwise qualifying for the 10% tier receive preferential treatment pursuant to negotiated agreements with the United States. Specifically, for covered products imported from the European Union and Taiwan, the Section 301 duty depends on the applicable most-favored-nation (MFN) duty rate. Where a product's MFN duty rate is less than 10%, the Section 301 duty will apply only in the amount necessary to bring the combined duty rate to 10%. Where the MFN duty rate is 10% or greater, no additional Section 301 duty will apply. This treatment applies only to covered products that are not otherwise exempt from the action.

12.5% tier

Products of other investigated economies are subject to an additional 12.5% duty.

As with the 10% tier, certain economies otherwise qualifying for the 12.5% tier receive preferential treatment pursuant to negotiated agreements with the United States. Specifically, covered products imported from Japan, South Korea, and Switzerland are subject to the additional Section 301 duty depending on the country’s applicable MFN duty rate. Where a product's MFN duty rate is less than 12.5%, the Section 301 duty will apply only in the amount necessary to bring the combined duty rate to 12.5%. Where the MFN duty rate is already 12.5% or greater, no additional Section 301 duty will apply. This treatment also applies only to covered products that are not otherwise exempt from the action.

Notably, the Final Notice adopts a broad range of product exclusions. In addition to initially proposed exclusions for informational materials, donations, accompanied baggage, and products already subject to Section 232 duties, USTR added exemptions for products whose inclusion could disrupt domestic supply chains, create economy-wide shortages, or otherwise undermine the effectiveness of the Section 301 action, as well as certain economy-specific products intended to encourage continued implementation of forced-labor import prohibitions.

Textile tariff-rate quotas

As part of the action, USTR will establish separate tariff-rate quotas (TRQs) for certain textile and apparel imports during an initial three-year period for Bangladesh, Cambodia, Indonesia, and Malaysia. Because the TRQ regime is intended to promote export of U.S.-origin cotton and textiles, each TRQ will be tied to that country’s imports of U.S.-origin cotton and textile goods, allowing corresponding quantities of such country’s exports to enter the United States without the additional Section 301 duties. Until USTR implements the TRQs through a subsequent Federal Register notice, covered textile and apparel imports from these countries remain subject to the 10% tariff rate.

USTR reasoning

USTR concluded that the investigated economies' failure to prohibit or effectively enforce restrictions on forced-labor imports creates unfair competitive conditions for U.S. producers because imported goods produced with forced labor frequently benefit from artificially depressed production costs. According to USTR, these practices burden U.S. commerce by distorting international markets and placing domestic manufacturers that comply with labor standards at a competitive disadvantage.

Implications for importers and supply chains

Imposing tariffs against 60 economies at once is unprecedented, and there is already litigation challenging the Section 301 tariffs. Although courts have upheld past Section 301 tariffs, those tariffs were more directed or case-specific.

Notwithstanding the ongoing litigation and any additional legal challenges, importers should immediately evaluate their potential exposure, as the tariffs are now in effect.

Companies should first determine whether imported goods qualify for any of the numerous exclusions contained in Annex I or Annex II to the Final Notice, as well as any other statutory exemptions. Businesses sourcing products from the European Union, Taiwan, Japan, South Korea, or Switzerland should also evaluate applicable MFN duty rates because the amount of the new Section 301 duty depends upon the MFN duty applicable to each product.

Importers of textile and apparel products from Bangladesh, Cambodia, Indonesia, and Malaysia should closely monitor forthcoming Federal Register notices establishing the new TRQ program, which may significantly reduce tariff liability for qualifying imports.

Importers should also review the Harmonized Tariff Schedule (HTS) Chapter 99 reporting requirements, review foreign-trade-zone strategies in light of the requirement in the Final Notice that covered merchandise admitted into U.S. foreign-trade zones generally be admitted in privileged foreign status, and verify country-of-origin determinations to ensure proper tariff treatment.

Lastly, companies should continue strengthening forced-labor-related controls, including supplier due diligence and contractual provisions, and maintain documentation demonstrating that imported goods were produced without the use of forced labor.

Endnotes