A New Tariff Regime Took Effect This Week
If your company sources goods from virtually anywhere outside the United States, your landed cost calculations changed at 12:01 a.m. on July 24, 2026. The U.S. Trade Representative finalized a sweeping new Section 301 tariff action that day, imposing new tariffs under Section 301 of the Trade Act of 1974 on imports from 60 trading partners that account for approximately 99.4% of U.S. imports, with duties of 10% or 12.5% subject to significant product and country-specific exceptions. These are not minor tweaks. They represent the broadest restructuring of U.S. import duties in decades, and they landed with almost no runway for preparation. This guide explains what happened, who is affected, what the key exceptions are, and what compliance steps every importer should take right now.
Why These Tariffs Exist: The Legal and Political Background
To understand this action you need to understand the chain of events that produced it. These forced labor tariffs are part of a broader administration strategy to reconstruct tariff coverage under Section 301 following the Supreme Court's February 20, 2026, ruling that the International Emergency Economic Powers Act does not authorize the imposition of tariffs — a decision that eliminated the principal legal basis for the administration's prior tariff program and prompted a pivot to Section 301 as the primary vehicle for imposing trade remedies going forward.
After the Supreme Court ruling, the administration moved quickly on two fronts. President Trump issued a Section 122 global import surcharge at 10% as a replacement, which was set to expire in July 2026. Simultaneously, on March 12, 2026, USTR initiated 60 investigations under Section 302(b)(1) of the Trade Act of 1974, examining whether various economies had failed to impose and effectively enforce a prohibition on the importation of goods produced with forced labor. That action came after USTR investigations that included two rounds of public hearings, more than 2,100 public comments, and engagement with trading partners to remedy longstanding concerns.
What USTR Found and What It Did
The findings were sweeping. USTR concluded that 54 of the investigated economies failed to impose and effectively enforce a forced labor import prohibition, and that six of the investigated economies failed to effectively enforce a forced labor import prohibition. The six that have a prohibition but fail to enforce it effectively are Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan.
On Thursday, July 23, 2026, USTR issued its final action pursuant to its investigation under Section 301 of the Trade Act of 1974, initiated on March 12, related to the failure of 60 economies to impose and effectively enforce a prohibition on the importation of goods produced with forced labor. The final action includes new U.S. import tariffs on all 60 economies investigated, with some differences in country-specific rates and covered product scope from the preliminary rates announced on June 2, and also includes Tariff-Rate Quotas for textiles and apparel for certain countries.
The Rate Structure: Who Pays What
Not all 60 economies face the same rate. The structure is tiered.
A 10% additional tariff generally applies to goods from economies that impose a forced labor import prohibition, have committed to impose and enforce such a prohibition through an Agreement on Reciprocal Trade, or have implemented a partial regime that prevents the importation of certain forced labor goods. These economies include Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom.
For the European Union and Taiwan the combined MFN and Section 301 duty is capped at 10%, and for Japan, South Korea, and Switzerland the cap is 12.5%. Where an economy's existing MFN duty meets or exceeds the applicable cap, the Section 301 tariff rate is zero.
The remaining 38 economies, including China, Brazil, Vietnam, and Russia, pay the flat 12.5% rate. Importantly, the new duty applies in addition to the existing Section 301 duties on imports from China and Brazil. Importers sourcing from those origins need to model the cumulative stacking effect across all applicable duty layers.
Exemptions You Need to Know
The scope of covered goods is broad — the new duties apply to most products classified in Chapters 1-97 of the HTSUS from the identified countries and economies — but the exemption list is meaningful and worth reviewing carefully.
Goods entered free of duty under the USMCA (Canada and Mexico) and CAFTA-DR textile and apparel goods from six Central American and Caribbean nations are fully exempt from these Section 301 forced labor tariffs. Products subject to Section 232 duties — including qualifying aluminum, steel, copper, vehicles, and semiconductors — will not have the Section 301 tariffs applied in addition to those duties. Civil aircraft, informational materials, donations, and accompanied baggage are also excluded.
USTR expanded the final exemption list by 471 HTSUS subheadings following public comment, covering raw materials, supply-chain-critical goods, and products that cannot be domestically sourced in sufficient quantities. Importers of pharmaceutical products should note a staggered timeline: a separate exemption for patented pharmaceutical articles covered under HTSUS headings 9903.04.60 through 9903.04.66 takes effect July 31, 2026.
For textile and apparel importers in particular, the announcement directs USTR to establish three-year Tariff-Rate Quotas for Bangladesh, Cambodia, Indonesia, and Malaysia, intended to encourage the use of U.S.-origin textile goods and cotton by allowing specified quantities of qualifying textile and apparel products to enter the United States free of the applicable Section 301 tariffs.
The In-Transit Grace Period
For shipments already on the water when these tariffs took effect, timing is critical. A limited in-transit exemption is available for goods loaded onto a vessel at the port of loading and in transit on the final mode of transit before 12:01 a.m. Eastern Time on July 24, 2026, provided those goods are entered for consumption or withdrawn from warehouse for consumption before 12:01 a.m. Eastern Time on July 28, 2026. Both conditions must be satisfied simultaneously. Arrival in the United States by July 28 is not the operative requirement — the entry must be formally made.
For anyone reading this on July 28, 2026, the grace period has now closed, but understanding the rule matters for any disputes or reconciliation of entries made in the past several days.
Legal Challenges Are Already Filed
These tariffs face immediate legal headwinds. Small businesses filed a pair of lawsuits in the U.S. Court of International Trade accusing President Trump and U.S. officials of unlawfully using Section 301 of the Trade Act of 1974 to replace earlier tariffs struck down by the Supreme Court. The cases challenge USTR's authority to impose sweeping tariffs without satisfying Section 301's country-specific findings and remedial requirements, arguing the tariffs cover lawful imports with no demonstrated connection to forced labor, including products imported by American small businesses with transparent and responsible supply chains.
The lawsuits ask the trade court to declare the tariffs unlawful, prevent their enforcement, and preserve importers' ability to receive refunds for any illegal tariffs. These new tariffs are considered more legally sturdy than the expiring temporary 10% Section 122 tariff and the earlier IEEPA tariffs the Supreme Court struck down 6-3 in February 2026, but the outcome of litigation is far from certain. Importers should monitor these proceedings closely, as a court-ordered injunction — or a stay — could again alter the duty landscape.
What Importers Must Do Right Now
The compliance checklist for every importer with supply chains touching any of the 60 covered economies is substantial. Start with scope: confirm which of your sourcing countries are covered and at which rate tier. Then review your HTS classifications product by product against the exemption annexes published in the Federal Register notice, because the action contains numerous country-specific and product-specific provisions, so the impact will vary across importers and individual transactions.
Recalculate your landed costs carefully. The temporary tariffs imposed under Section 122 expired on July 24, 2026, so importers should not assume that overall duty costs will increase by the full amount of the new Section 301 tariffs. The net impact will depend on the country of origin, product classification, eligibility for exclusions, and the applicability of other trade measures.
For entry filing, CBP issued entry filing instructions in CSMS #69326983, including the Chapter 99 headings (9903.05.20 through 9903.06.21), reporting sequence, and Foreign Trade Zone admission requirements. Importers should work closely with customs brokers to ensure compliance with the new Chapter 99 reporting requirements now in effect.
Also assess free trade agreement eligibility systematically. Goods from Canada and Mexico that qualify for duty-free treatment under the USMCA are not subject to the new Section 301 tariffs. If you source from USMCA-origin suppliers, confirming that qualification at the entry level is now more valuable than ever.
How ASR Can Help
The pace of tariff change in 2026 has been extraordinary, and keeping entries fully compliant while managing duty exposure is not a task importers can handle alone. ASR WorldWide Express works with a network of trusted, licensed customs broker partners who can review your HTS classifications against the new Section 301 exemption annexes, identify free trade agreement eligibility, and ensure your entries are filed with the correct Chapter 99 headings from day one. As a licensed freight forwarder (FMCSA MC# 1667345-B, DOT# 4286843, SCAC AZCB), ASR coordinates the full import cycle — from origin pickup and ocean or air freight booking to final delivery and customs clearance coordination — so your team has a single point of contact when the rules are changing this fast.
Call us at +1 786 373 3003 or email shipping@asrwe.com to schedule a duty-exposure review for your current sourcing portfolio.
Important Disclaimer
This article is intended for general informational purposes only and does not constitute legal, tax, or customs advice. Tariff rules, exemption lists, and legal interpretations are evolving rapidly and may change after the publication date of July 28, 2026. Importers should consult a licensed customs broker and qualified trade counsel before making sourcing, classification, or compliance decisions based on any information contained here.
