Comment window closes on sweeping forced labor tariffs as USTR races to lock in a permanent replacement before the Section 122 surcharge expires July 24
By the US Trade Desk, Peacock Tariff Consulting
WASHINGTON, July 6, 2026
The window for American businesses to shape the largest tariff action in the 52 year history of Section 301 closes tonight. Written comments on the Office of the United States Trade Representative’s proposed forced labor tariffs, additional duties of 10 percent to 12.5 percent on imports from 60 trading partners that together account for 99.4 percent of all US import value, are due by the end of the day Monday, July 6. Public hearings open Tuesday morning at the US International Trade Commission in Washington and run through Thursday, July 9.
The deadline arrives 18 days before an even harder stop. The temporary 10 percent global import surcharge that President Trump imposed under Section 122 of the Trade Act of 1974 expires by operation of law at 12:01 a.m. EDT on July 24, exactly 150 days after it took effect on February 24. According to the trade law firm Nakachi Eckhardt & Jacobson, no extension legislation is pending in Congress, and the statute does not permit the President to renew the surcharge on his own authority. USTR has signaled that it intends to finalize the forced labor duties before that clock runs out, with a final determination expected around July 20, according to reporting by Tech Times.
The result is a July that trade lawyers are describing as the most consequential month for US tariff policy since the Supreme Court struck down the administration’s emergency powers tariffs in February. What emerges from this week’s hearings will determine whether a 10 percent floor under nearly all US imports becomes a permanent feature of the trade landscape, and whether Section 301, a statute historically reserved for targeted bilateral disputes, can carry the weight of an economy wide tariff regime.
A Deadline Day With Two Tracks
Today’s comment deadline is the last formal opportunity for importers, trade associations, and foreign governments to argue for changes to the proposed rates, product exclusions, or country classifications before USTR closes the record. The agency has received more than 450 public submissions and rebuttal comments since the investigations began, and nearly 60 witnesses testified during an earlier round of hearings in late April and early May.
The hearings that open Tuesday will be held at the US International Trade Commission at 500 E Street SW in Washington, beginning at 10:00 a.m. Eastern each day. USTR has said transcripts will be posted to its website after the proceedings conclude, and no livestream will be offered. The deadline to request an appearance passed on June 22, so the witness list is set. Companies that missed the window still have one path left: post hearing rebuttal comments, due within five days of the hearings’ conclusion, or roughly July 14.
Separately, Saturday brought a fresh reminder of the other track running through the month. In a client alert published July 4, Nakachi Eckhardt & Jacobson laid out the mechanics of the Section 122 sunset, noting that the surcharge’s statutory expiration is distinct from the pending litigation over its legality. The Court of International Trade held the surcharge unlawful earlier this year, but the Federal Circuit stayed that ruling pending the government’s appeal in State of Oregon v. United States, so US Customs and Border Protection has continued to collect the 10 percent duty on entries and will do so through July 23. The July 24 sunset ends the surcharge going forward but does not by itself refund the duties already collected. The fate of those funds remains tied to the appeal.
What USTR Has Proposed
The proposal at the center of this week’s hearings dates to June 2, when USTR announced findings in 60 parallel Section 301 investigations initiated on March 12. In each case, the agency determined that the trading partner’s failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor is unreasonable or discriminatory and burdens or restricts US commerce, the statutory trigger for action under Section 301(b) of the Trade Act of 1974.
The proposed remedy comes in two tiers. Fourteen trading entities, including Canada, Mexico, the European Union, the United Kingdom, Taiwan, Ecuador, Indonesia, and Pakistan, face a 10 percent additional duty. These are jurisdictions that have adopted a full or partial forced labor import prohibition, or that have committed to one through a reciprocal trade agreement with the United States, but that USTR found are not effectively enforcing it at the border. The remaining 46 economies, a group that includes China, Vietnam, India, Thailand, Japan, and South Korea, face a 12.5 percent rate because they have neither enacted a forced labor import prohibition nor committed to one.
The factual predicate is stark. USTR found that 54 of the 60 investigated economies have never imposed any legal prohibition on imports of goods made with forced labor. The other six, including Canada, Mexico, and the EU, have prohibitions on paper that the agency judged ineffective in practice. The EU’s placement in the lower tier reflects USTR’s determination that the bloc’s Corporate Sustainability Due Diligence Directive, while a genuine forced labor mechanism, has not been meaningfully enforced at the border.
The proposal is not without carve outs. According to analysis by the logistics publication The Conveyor and the law firm Gibson Dunn, goods that qualify for preferential treatment under the USMCA, duty free textiles and apparel under DR-CAFTA, products already covered by Section 232 national security tariffs, pharmaceuticals, and critical minerals would be exempt. USTR is also soliciting comment on a novel textile mechanism under which a volume of apparel and textile imports from certain partners would enter at a reduced rate calibrated to those partners’ purchases of US produced textiles and cotton, a reciprocal access structure that could let exporters cut their effective duty burden by buying more American inputs.
The Post IEEPA Architecture
None of this is happening in a vacuum. The forced labor action is the centerpiece of a rapid rebuild of US tariff authority that began on February 20, when the Supreme Court ruled 6 to 3 in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act does not authorize the President to impose tariffs. Chief Justice John Roberts, writing for the majority, held that IEEPA’s power to regulate importation does not encompass the power to tax it, a function the Constitution reserves to Congress.
The decision instantly dissolved the legal foundation under the administration’s global tariff regime. Within three weeks, the White House and USTR had assembled a replacement scaffold. On February 24, the President invoked Section 122, a balance of payments provision that permits an import surcharge of up to 15 percent for a maximum of 150 days, and set the rate at 10 percent as a bridge measure. On March 11, USTR opened 16 Section 301 investigations into structural excess manufacturing capacity among major trading partners. On March 12 came the 60 forced labor investigations, one for nearly every significant US trading relationship.
Treasury Secretary Scott Bessent has been explicit about the objective. He has publicly indicated that the administration intends to use the combination of Section 301 tariffs, remaining Section 122 authority, and existing Section 232 tariffs on steel, aluminum, copper, and other commodities to keep tariff revenue at the near record levels reached before the Supreme Court’s ruling.
The choice of Section 301 as the load bearing statute carries real consequences. Unlike IEEPA, which the administration invoked by emergency declaration, Section 301 requires a formal investigative process: written public submissions, public hearings, consultations with the target governments, and a legal determination supported by a factual record. Scholars Kari Heerman and Elena Patel of the Brookings Institution noted in March that this process gives businesses, workers, and other stakeholders a genuine opportunity to shape the record on which any tariffs will rest, an opportunity that simply did not exist under the emergency powers approach. It is also, in the view of trade lawyers at Gibson Dunn and elsewhere, potentially more durable in court, provided USTR builds a reasoned record connecting the remedy to its findings.
What makes the current action structurally unprecedented is its breadth. Across 52 years and roughly 130 cases, Section 301 has functioned as a targeted instrument: against the EU over agricultural access, against China over intellectual property, against Canada over lumber. The 2026 action applies a single legal rationale across 60 economies simultaneously, in a single administrative proceeding, covering more than 99 percent of US import activity. As Tech Times put it in its July 4 analysis, that is not a trade dispute; it is a structural redesign of the tariff foundation.
The July 24 Cliff That Isn’t a Cliff
For importers, the most counterintuitive feature of the month is that the expiration of the 10 percent surcharge may deliver no relief at all. Some companies scheduled shipments to clear customs after July 24 in the expectation of lower landed costs. The Conveyor warned in June that those importers could face a new duty instead, and in many cases pay more overall.
The reason is stacking. Gibson Dunn notes that the proposed Section 301 duties would apply in addition to most favored nation rates, the earlier China Section 301 duties dating to 2018, antidumping and countervailing duties, and Section 232 tariffs. The new duties are not designed to slot into the hole left by Section 122; they are designed to sit on top of everything that remains. An importer sourcing from a 12.5 percent tier country could see its total duty burden rise rather than fall when the calendar flips past July 24.
Nor is the forced labor action the only measure tracking the sunset. Section 232 actions are proceeding in parallel, including 100 percent duties on patented pharmaceuticals and active pharmaceutical ingredients that take effect July 31 for larger companies and September 29 for others, according to Nakachi Eckhardt & Jacobson. And unlike Section 122, neither Section 301 nor Section 232 carries a statutory rate ceiling or a fixed expiration date. If the forced labor duties are finalized, the current 10 percent floor under most US imports would become permanent rather than temporary.
An Awkward Fit With the New EU Deal
Perhaps the most diplomatically delicate element of the proposal is the EU’s inclusion, because it collides with a transatlantic trade agreement that took effect only five days ago. Following approval by the European Parliament on June 16 and formal adoption by the Council of the EU on June 25, the bloc eliminated all duties on imports of US industrial goods and improved access for certain American farm and seafood products as of July 1, fulfilling its side of the framework agreement reached in August 2025. President Trump had given the EU until July 4 to implement its commitments; Brussels beat the deadline by three days.
Under that deal, the United States committed to a 15 percent all inclusive tariff ceiling on most EU products, a ceiling the European Commission has described in plain terms as meaning no stacking. A new 10 percent Section 301 duty layered onto EU goods raises an immediate question: is it absorbed within the 15 percent ceiling, or is it a fresh imposition that breaches the agreement in its first weeks of operation?
Brussels appears to have anticipated the scenario. The EU’s implementing legislation contains safeguard and suspension mechanisms allowing the bloc to withdraw its own concessions if it judges US actions inconsistent with the framework, including a provision tied to US steel and aluminum tariffs remaining above 15 percent through the end of 2026. EU trade officials had not publicly responded to the Section 301 proposal as of this weekend, but the question of whether a finalized 10 percent duty counts against the ceiling or on top of it could become the first real test of the agreement’s durability.
Pushback From Beijing, Business, and the Bar
Foreign reaction to the proposal has ranged from flat rejection to wary engagement. China, facing the 12.5 percent rate, rejected the forced labor finding outright and said it opposes all forms of unilateral tariffs. India, also in the higher tier, said it remains engaged with Washington on the proceedings and noted that the proposed duties are not yet final.
The sharper structural critique has come from the international business community. Andrew Wilson, deputy secretary general of the International Chamber of Commerce, warned that the US framework risks becoming a global template in ways that could harm legitimate trade. Wilson pointed to the burden of proof structure embedded in the proposal, under which a company must demonstrate the absence of forced labor in its supply chain once a claim is made, arguing that it effectively reverses normal evidentiary assumptions and could be weaponized against any importer.
Trade lawyers see litigation coming. Snell & Wilmer wrote that the action is likely to face a litigation challenge, and Troutman Pepper expects challengers to focus on the core legal theory: whether another country’s failure to enact a forced labor import ban of its own can qualify as an unreasonable trade practice that burdens US commerce. The Congressional Research Service has raised a fairness concern as well, noting that the proposal sweeps in smaller developing economies that historically received US technical assistance to build enforcement capacity, not punitive tariffs, and questioning whether those countries could realistically have stood up an import ban comparable to Section 307 of the Tariff Act of 1930 in the few months since the investigations began.
The multilateral system offers aggrieved partners little recourse. The WTO Appellate Body has been unable to function since 2020, after the United States blocked new appointments, and more than 30 dispute rulings have been appealed into the void. There is no working enforcement mechanism through which the 60 targeted economies could formally challenge the tariffs, leaving bilateral negotiation, and retaliation, as the practical options.
The Economic Stakes
The macroeconomic significance of this month’s decisions is hard to overstate. Because the proposed duties cover virtually the entire import base, their incidence will be felt across consumer goods, industrial inputs, and capital equipment alike. Tariffs function as taxes on imported goods, and, as Brookings researchers have emphasized throughout the Section 301 process, changes in their level and scope ripple through prices, supply chains, and the allocation of costs across firms and consumers, as well as through federal revenue.
Revenue is precisely the point, by the administration’s own account. With Section 122 expiring and the IEEPA tariffs gone, the forced labor duties are the instrument designed to keep collections near the historic highs reached in 2025. For businesses, the same design choice means the aggregate tariff burden on US imports is intended to hold roughly steady, or rise, even as the legal authority underneath it changes.
Sector exposure varies widely. The Plastics Industry Association estimates that roughly 71 percent of US plastics industry imports from the covered countries could become subject to the new duties. Retailers moved early: US containerized imports from China jumped sharply in May as companies front loaded holiday orders ahead of the July 24 transition, according to supply chain reporting by The Conveyor. Apparel and footwear importers are watching the proposed textile quota mechanism closely, since its final design could mean the difference between a manageable adjustment and a double digit cost shock on top of existing China duties.
The tiering itself creates competitive effects. A 2.5 point spread between the 10 percent and 12.5 percent tiers is small in absolute terms, but for thin margin categories it could influence sourcing decisions at the margin, nudging orders toward Canada, Mexico, and other lower tier jurisdictions and away from the 46 countries in the higher band. The exemptions cut the other way: USMCA qualifying goods escape the duties entirely, which sharpens the incentive to qualify North American production under the agreement’s rules of origin, especially with the first trilateral USMCA review having opened on July 1.
What Importers and Exporters Should Do Now
For companies with exposure, the practical agenda between now and July 24 is concrete. Trade counsel are urging importers to map exposure by country of origin and Harmonized Tariff Schedule number against 2025 and 2026 entry data, model both the 10 percent and 12.5 percent rates as additional layers against margin and pricing assumptions, and test whether existing exclusions under Section 232, USMCA, DR-CAFTA, and the proposal’s Annex A actually cover their products before assuming relief. Foreign trade zone strategies and Incoterms positions deserve a fresh look as well, since they can shift which party in a transaction bears the new duty.
Participation in the administrative record still matters. USTR specifically invited evidence on whether the proposed product scope is appropriate, whether the Annex A exclusions are correctly drawn, whether tariffing particular products would create domestic supply shortages or broader disruptions, and whether different rates should apply to economies with stronger or weaker forced labor commitments. A focused submission backed by entry data and supply chain documentation remains the most effective lever available, and after tonight, the post hearing rebuttal window closing around July 14 is the last one.
Exporters in the 60 targeted economies face a different calculus. For governments, the proposal effectively prices the absence of a forced labor import regime: enacting and enforcing a prohibition, or committing to one in a reciprocal trade agreement, is the visible route from the 12.5 percent tier to the 10 percent tier, and potentially off the list altogether. Several capitals are said to be weighing exactly that trade, though none in the higher tier had announced new legislation as of this weekend.
The Weeks Ahead
The sequence from here is compressed. Hearings run July 7 through July 9. Rebuttal comments close around July 14. USTR’s final determination is expected near July 20. The Section 122 surcharge dies at 12:01 a.m. on July 24, and the administration intends to have its successor in place without a gap. Beyond that, a separate Section 301 determination on structural overcapacity, covering 16 major trading partners including China, the EU, and Japan, is expected in the coming months, and unless expressly exempted, new measures may stack on the forced labor duties just as those duties stack on everything else.
Litigation is all but certain, and the Federal Circuit’s eventual ruling on the Section 122 appeal will decide whether importers recover any of the billions collected under the expiring surcharge. But the administration has learned the lesson of the IEEPA defeat: this time the tariffs come wrapped in an administrative record, built through exactly the process that concludes this week. For the businesses that move goods across US borders, the message of July 2026 is that the tariff era is not ending with the Section 122 sunset. It is being made permanent.