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On July 23, 2026, the Trump administration announced new tariffs (Forced Labor Tariffs) on goods from 60 economies, including the European Union (EU) and China, alleging these economies either failed to enforce forced labor prohibitions or failed to adopt a forced labor import prohibition. The new duties took effect on July 24, 2026, replacing the temporary 10% global tariff imposed by President Trump under Section 122 of the Trade Act of 1974 (Section 122 Tariffs), which expired on July 24, 2026. Section 122 Tariffs originally were imposed after the Supreme Court struck down the administration’s prior tariffs imposed under the International Emergency Economic Powers Act (IEEPA).[1] Although the Trump administration has stated that the Forced Labor Tariffs will apply to 99% of imports into the United States, the duties (ranging from 10 to 12.5%) have a number of exemptions and exclusions, including products subject to tariffs imposed under Section 232 of the Trade Expansion Act (Section 232 Tariffs).
The Forced Labor tariffs were imposed under Section 301 of the Trade Act of 1974, which authorizes the U.S. Trade Representative (USTR) to impose remedial action if it determines “an act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts United States commerce.”[2] These tariffs were announced following an administrative process that began in March 2026.[3] Unlike the prior imposition of tariffs under IEEPA, there is precedent for the imposition of tariffs under Section 301. However, the use of Section 301 tariffs at this scale and breadth of coverage already has generated legal challenges.
Separately, on July 20, 2026, the Trump administration announced additional tariffs on Canada, signing three proclamations invoking Section 338 of the Tariff Act of 1930, a less widely used to statue to impose tariffs, to impose 50% tariffs on certain Canadian-origin goods. Although bilateral negotiations are ongoing, the Section 338 tariffs are set to take effect on August 19, 2026 and are discussed in further detail below.
Link to Forced Labor Tariff Rate Calculation Forced Labor Tariff Rate Calculation
Under the Forced Labor Tariffs, trading partners that have imposed a forced labor import prohibition, committed to do so, or taken steps toward implementation, are subject to a 10% tariff (17 countries), while the 12.5% tariff rate applies to 38 other countries. For the remaining five trading partners, the Forced Labor Tariff is calculated on a net-of-Most Favored Nation (MFN)-basis, effectively creating a tariff ceiling rather than an additional stacked duty.
- 10% Rate. A flat 10% rate applies to goods from the following 17 countries: Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom.
- 12.5% Rate. A flat 12.5% rate applies to goods from 38 countries investigated as part of the Section 301 action that neither qualify for the more favorable 10% rate nor have an established MFN status.
- Tariff Cap for Certain MFNs. For five trading partners (the EU, Taiwan, Japan, South Korea, and Switzerland), the Forced Labor Tariffs effectively will operate as a cap, rather than an additional stacked duty. The applicable tariff cap is 10% for the EU and Taiwan, and 12.5% for Japan, South Korea, and Switzerland. In effect, no additional Forced Labor Tariff is imposed where a product’s existing MFN duty rate already meets or exceeds the relevant cap. Where the MFN rate falls short, the Forced Labor Tariff makes up the difference, raising the total to the applicable 10% or 12.5% threshold.
Link to Section 301 Product Exemptions Section 301 Product Exemptions
Although Forced Labor Tariffs apply to all products originating from the identified economies, the tariffs exclude goods in the following five categories:
- Raw materials where the imposition of tariffs could create domestic supply shortages;
- Products that could cause economy-wide disruptions if subject to the proposed additional tariffs;
- Products that cannot be produced domestically in sufficient quantities or at reasonable prices, or obtained from alternative markets;
- Products for which tariffs would be ineffective in addressing the forced labor practices at issue in the investigation; and
- Products that if exempted would encourage economies that have made commitments to the United States regarding forced labor import prohibitions to implement those commitments or to enact and effectively enforce a forced labor import prohibition.[4]
Products excluded under these categories include certain oil and gas products, fertilizers, food and agricultural products, pharmaceutical products, and civil aircraft and aircraft components.[5] Goods already subject to Section 232 Tariffs, such as steel, aluminum, and copper[6] and goods from Mexico and Canada that are entered free of duty under the United States–Mexico–Canada Agreement (USMCA) also are excluded from the new duties. Goods covered under the Forced Labor Tariffs will continue to be subject to any existing antidumping or countervailing duties applicable to those products.
Alongside the Forced Labor Tariffs, the White House also directed the USTR to establish a new tariff-rate quota (TRQ) mechanism for imported textiles originating from Bangladesh, Cambodia, Indonesia, and Malaysia. The TRQ mechanism will allow a certain volume of apparel and textile imports to enter the United States at a zero Section 301 tariff rate and was adopted “as a means to encourage the importation by trading partners of U.S. cotton and textile goods, in order to reduce the reliance of such partners on inputs from other sources that are more likely to contain forced labor inputs.”[7]
Link to Section 338 Tariffs on Canadian Goods Section 338 Tariffs on Canadian Goods
Separately from Forced Labor Tariffs, on July 20, 2026, the Trump administration imposed an additional 50% tariff on certain Canadian goods under Section 338 of the Tariff Act of 1930[8] in response to Canada’s alleged discriminatory treatment of American products in the dairy, automotive, and alcoholic beverages markets.[9] The new Section 338 tariffs target roughly $20 billion in annual U.S. imports from Canada[10] and take effect on August 19, 2026. Although the proposed Section 338 tariffs do include a number of exemptions, including products subject to Section 232 Tariffs, critical minerals, and potash, the tariffs are expected to apply even to goods qualifying for preferential treatment under the USMCA, which is currently undergoing bilateral negotiations.
Link to Parallel “Excess Capacity” Section 301 Investigation Parallel “Excess Capacity” Section 301 Investigation
A separate, ongoing Section 301 investigation seeks to determine whether 16 trading partners[11] have laws and regulations related to excess capacity that are unreasonable or discriminatory and burden or restrict U.S. commerce, and if so, may result in additional tariffs.[12] The USTR describes “structural excess capacity” as “underutilized industrial production capacity that is sustained through governmental interventions or policies” that incentivize foreign companies to maintain or grow their unused capacity inefficiently, and contends that such excess displaces U.S. production and manufacturing.[13] The USTR solicited public comments and held a public hearing in May 2026, but has not yet released a report of its findings or a notice of proposed actions.
Link to Implications for Importers and Looking Ahead Implications for Importers and Looking Ahead
The Forced Labor Tariffs are imposed alongside Section 232 Tariffs, Section 338 tariffs on certain Canadian goods, existing Section 301 tariffs on China from the first Trump administration, existing antidumping and countervailing duties, and other applicable duties, creating complex and layered compliance obligations. Importers should determine whether their goods fall within the product exemptions, which tariff tier applies based on the country of origin, and how these new duties interact with duties already applicable to their imports. Additionally, importers who are unfamiliar with their entries or with the duty calculation process should engage a customs broker, trade counsel, or other trade professional to understand applicable laws, regulations, and procedures.
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Cleary’s international trade team is available to assist with tariff classification analysis, compliance assessments, and strategic planning in light of the Forced Labor Tariffs and related actions.
Cleary summer associate Patrick Shayer also contributed to this article.
[1] Our blog post describing Learning Resources, Inc. et al. v. Trump is available here.
[2] See 19 U.S.C. Ch. 12 § 2411(b)(1).
[3] In March 2026, the USTR initiated investigations into 60 trading partners related to the failure of those economies “to impose and effectively enforce a prohibition on the importation of goods produced with forced labor.” See, The White House, USTR Takes Action in Forced Labor Section 301 Investigations, July 23, 2026, available here. In April, the USTR and the Section 301 committee held public hearings, followed by consultations with the governments of dozens of the economies subject to investigation. Following the USTR’s determination that the polices of the investigated trading partners related to forced labor are unreasonable and burden or restrict U.S. commerce, the USTR proposed responsive action, invited public comment, and held public hearings, resulting in the announced tariff determinations.
[4] See, The White House, Actions by the United States in the Investigations under Section 301 of the Trade Act of 1974 of the Acts, Policies, and Practices of 60 Economies Related to the Failure of Each Economy to Impose and Effectively Enforce a Prohibition on the Importation of Goods Produced with Forced Labor, July 23, 2026, available here.
[5] See, The White House, Actions by the United States in the Investigations under Section 301 of the Trade Act of 1974 of the Acts, Policies, and Practices of 60 Economies Related to the Failure of Each Economy to Impose and Effectively Enforce a Prohibition on the Importation of Goods Produced with Forced Labor Annex, July 23, 2026, available here.
[6] See, The Office of the United States Trade Representative, Fact Sheet: USTR Section 301 Action in Response to the Failure of 60 Economies to Ban Imports Produced with Forced Labor, available here. A complete list of excluded products, including country-specific exclusions, is available in Annex II of the USTR’s Notice of Actions in Section 301 Investigations of Acts, Policies, and Practices of Various Economies Related to the Failure of Each Economy to Impose and Effectively Enforce a Prohibition on the Importation of Goods Produced with Forced Labor, available here.
[7] See, The White House, Actions by the United States in the Investigations under Section 301 of the Trade Act of 1974 of the Acts, Policies, and Practices of 60 Economies Related to the Failure of Each Economy to Impose and Effectively Enforce a Prohibition on the Importation of Goods Produced with Forced Labor, July 23, 2026, available here.
[8] Under Section 338, the President has the authority to impose supplemental duties of up to 50% against trading partners determined to have discriminated against U.S. goods.
[9] See The While House, Fact Sheet: President Donald J. Trump Imposes Additional Tariffs on Canada, July 20, 2026, available here.
[10] See Office of the United States Trade Representative, Ambassador Greer Issues Statement on President Trump Imposing Section 338 Tariffs on Canada, July 20, 2026, available here.
[11] The 16 trading partners in the Excess Capacity Investigation are Bangladesh, China, Cambodia, the European Union, Indonesia, India, Japan, Korea, Malaysia, Mexico, Norway, Singapore, Switzerland, Taiwan, Thailand, and Vietnam.
[12] See, the Office of the United States Trade Representative, USTR Initiates Section 301 Investigations Relating to Structural Excess Capacity and Production in Manufacturing Sectors, March 11, 2026, available here.
[13] See, Initiation of Section 301 Investigations: Acts, Policies, and Practices of Certain Economies Relating to Structural Excess Capacity and Production in Manufacturing Sectors, 91 Fed. Reg. 12,886, 12,887 (Mar. 17, 2026), available here.