And the (Tariff) Beat Goes On: New Section 301 Forced-Labor Tariffs Imposed on 60 Countries

The Office of the U.S. Trade Representative (USTR) on July 23, 2026, finalized and imposed tariffs under Section 301 of the Trade Act of 1974 (19 U.S.C. ch. 12 §§ 2101 et seq.) on imports from 60 countries following its investigation into these countries' efforts to prohibit the import of products made with forced labor. The tariffs were announced around 5 p.m. ET on July 23, 2026, and took effect at 12:01 am ET the following day, precisely when global tariffs under Section 122 of the Trade Act of 1974 expired. Those tariffs had served as the Trump Administration's temporary replacement for the International Emergency Economic Powers Act (IEEPA) tariffs struck down by the U.S. Supreme Court.

The Section 301 forced-labor tariffs are either 10 percent for countries that USTR has determined have prohibitions in place on imports made with forced labor or 12.5 percent for countries that have no such prohibitions. These tariffs include a wide range of exemptions, including products already subject to tariffs under Section 232 of the Trade Expansion Act of 1962, agricultural goods not produced domestically (at all or in sufficient quantities) and inputs used in U.S. manufacturing. Imports that qualify for preferential treatment under the U.S.-Mexico-Canada Agreement (USMCA) are also exempt from these tariffs.

USTR is expected to announce its findings and proposed remedies soon following its Section 301 investigation into manufacturing excess capacity involving 16 countries. Any resulting tariffs from this investigation would likely stack on top of the Section 301 forced-labor tariffs.

Background: Timeline and Process

USTR initiated the forced labor investigations on March 12, 2026, and determined on June 2 that all 60 countries' practices were actionable under Section 301(b) and proposing responsive tariff action in a notice published on June 5. The public was invited to comment on the proposed action by July 6, 2026, and USTR received more than 1,600 written comments, followed by three days of public hearings (July 7-9), at which more than 100 witnesses testified. The Final Action was then issued on July 23, 2026, and took effect at 12:01 a.m. ET on July 24, 2026.

Proposed vs. Final Rate Structure

The Final Action introduces a "net of MFN" (Most Favored Nation) carve-out for major partners. The June 2026 proposal applied a straightforward two-tier structure: a 10 percent additional duty (stacking on top of existing "standard" MFN rates) for economies with forced-labor import prohibitions in place and a 12.5 percent additional duty (also stacking) for every other economy. The Final Action added to this basic two-tier framework with two new net of MFN rate treatments not present in the June proposal:

• a flat 10 percent stacking rate for 17 trading partners (Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom)
• a combined 10 percent duty, net of each product's MFN rate, for the European Union and Taiwan
• a combined 12.5 percent duty, net of MFN rate, for Japan, South Korea and Switzerland
• a flat 12.5 percent stacking rate for all other investigated economies (38 total), including China and Vietnam

Impacted Countries and Products

The Section 301 forced-labor investigation targeted 60 countries and put each into one of two categories: those that have put in place prohibitions on imports made with forced labor and those that have not.

USTR identified 19 countries as having placed a prohibition on the import of products made with forced labor or committed to imposing and enforcing such a prohibition, which are subject to a 10 percent tariff on nonexempt imports.

Forty-one countries were identified as having no prohibition in place to prevent forced-labor imports, which are subject to a 12.5 percent tariff on nonexempt imports.

See the table below for a country-by-country breakdown of the new tariff rates.

Exemptions

In its Final Action, USTR summarized the exemptions as falling into several categories:

• Raw Materials. Raw materials essential to U.S. manufacturing
• Economywide Disruptions. Products that could cause economywide disruptions if subject to these tariffs
• Supply Constraints. Products that cannot be grown or produced in sufficient quantities or at reasonable prices in the U.S. or obtained from other sources
• Limited Policy Effectiveness. Products for which these tariffs may not be effective in securing changes to policies regarding forced-labor imports
• Country-Specific Carve-Outs. Certain products of Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, the EU, Guatemala, Indonesia, Jordan, Malaysia, Switzerland, Taiwan and U.K. intended to encourage these economies to fulfill commitments regarding forced-labor import prohibitions or enact and effectively enforce such prohibitions
• Textile Tariff Rate Quotas for Bangladesh, Cambodia, Indonesia and Malaysia. A certain volume of apparel/textile imports will be allowed to enter at a reduced rate tied to each economy's importation of U.S. cotton and textile inputs to be established by USTR and implemented no earlier than September 1, 2026¹

Political and Regulatory Context

Following the Supreme Court's February 20, 2026, decision invalidating the President's tariffs under the IEEPA, the Trump Administration quickly put in place a global 10 percent tariff pursuant to Section 122 of the Trade Act of 1974. Section 122 authorizes the president to impose tariffs no higher than 15 percent and for no more than 150 days. These tariffs expired at midnight on July 23, 2026, and are presently being challenged in court.

The Section 301 forced-labor tariffs entered into force at 12:01 am ET on Friday, July 24, only hours after they were announced. Trump Administration officials have indicated their objective was to maintain a consistent tariff structure and avoid a "tariff holiday" between the expiration of the Section 122 tariffs and imposition of the new Section 301 tariffs.

Strategic and Negotiating Context

In its investigation and Final Action, USTR distinguished between countries that had placed forced-labor import prohibitions and those that had not. The USTR Final Action has determined that some countries have imposed, but not effectively enforced, forced-labor import prohibitions, resulting in a 10 percent tariff. This 10 percent tariff can be removed only upon USTR's determination that the target country is effectively enforcing its forced-labor import prohibition.

USTR found that the majority of countries targeted in this investigation had no forced-labor import prohibition in place and should therefore be subject to a 12.5 percent tariff. If a country imposes such a prohibition and USTR recognizes this prohibition as potentially effective in stemming forced-labor imports, USTR may reduce the 12.5 percent tariff to 10 percent.

Legal Uncertainty

The Section 301 tariffs are already being challenged by a legal group representing importers, which filed suit in the Court of International Trade the day the tariffs took effect. USTR has met all statutory requirements of Section 301, including public notice and opportunity to comment, public hearings and consultations with target countries. However, plaintiffs argue in their suit that both the context for these investigations and speed with which they were conducted indicate the Trump Administration's motivation was simply to maintain a minimum tariff to replace the IEEPA tariffs the Supreme Court invalidated rather than combat forced labor. The plaintiffs argue that this underlying justification places the new tariffs outside the scope of Section 301's granted tariff authority.

Next Steps and Recommended Action Items for Clients and Affected Businesses

These new tariffs impose meaningful compliance and cost pressures on companies that source from the affected trading partners. Businesses with supply chains touching the countries named in the Final Action should anticipate not only greater tariff exposure, but also closer examination from both regulators and customers. That said, the forthcoming textile mechanism may offer a narrow avenue for duty relief to certain apparel and textile companies, particularly where reduced tariffs are linked to U.S. export volumes. At the same time, the government's sharpened focus on forced-labor compliance is likely to increase legal, regulatory and reputational risk, making it important for affected companies to strengthen supply chain monitoring, recordkeeping and internal compliance controls. With these tariffs now in effect, clients should work to determine whether they have direct or indirect tariff exposure.

Holland & Knight's International Trade Group can work with clients to help navigate an increasingly complex tariff regime and mitigate their tariff burdens.

The table below shows tariff rates by country.²

For more information or questions, please contact the authors. Holland & Knight also will host a webinar, "Navigating a Changing Tariff Landscape: IEEPA Refunds, Section 122 Challenges and the New Section 301 Tariffs," on August 6 at 11 a.m. ET. View more information and register.

Notes

¹ The White House.

² Brownstein, Trump Administration Imposes Tariffs Under Section 301 Investigation into Forced Labor Imports.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.