Fresh government trade data released Monday show the average U.S. tariff burden fell to 7.1 percent in June, even as the administration finished rebuilding its global tariff wall on a new legal foundation that courts are already testing.
WASHINGTON, Aug. 12, 2026
The most detailed picture yet of America’s post Supreme Court tariff landscape emerged Monday, when the Penn Wharton Budget Model published its analysis of newly released U.S. International Trade Commission customs data. The numbers tell a story of a tariff system that has been struck down, rebuilt and reshaped by importer behavior, all within eighteen months: the average effective tariff rate on U.S. imports stood at 7.1 percent as of June 2026, more than triple the 2.3 percent rate of January 2025 but well below the peaks reached before the Supreme Court declared the administration’s flagship tariffs unconstitutional in February.
The August 10 release lands at a pivotal moment. The administration’s replacement tariff program, imposed under Section 301 of the Trade Act of 1974 and effective July 24, is now fully operational across imports from 60 trading partners covering approximately 99.4 percent of U.S. imports. Two lawsuits filed at the U.S. Court of International Trade are challenging that program as a repackaging of the very duties the Supreme Court threw out. And the Commerce Department is simultaneously proposing to widen a separate tariff regime on steel, aluminum and copper goods. For importers, the data offer the first reliable baseline for planning in a system that has changed statutory clothes three times since February.
From IEEPA to Section 122 to Section 301
The 7.1 percent effective rate is the residue of a legal saga without precedent in modern trade policy. On February 20, 2026, the Supreme Court held that the International Emergency Economic Powers Act did not authorize the sweeping global tariffs the administration imposed in 2025, invalidating duties that had generated approximately $166 billion in collections. Within days, the administration replaced the fallen program with a 10 percent global import duty under Section 122 of the Trade Act, a balance of payments provision that permits temporary tariffs but caps their duration at 150 days.
The Penn Wharton data capture the switch precisely: both the observed and counterfactual tariff rate series drop sharply in March, reflecting what the researchers describe as the repeal of the IEEPA tariffs in late February and their replacement with the 10 percent global tariff under Section 122.
The Section 122 bridge expired on schedule in late July, and the administration had its successor ready. Effective July 24, the U.S. Trade Representative imposed new duties of 10 percent or 12.5 percent on imports from 60 economies under Section 301, grounded in findings that those trading partners have failed to impose or effectively enforce prohibitions on the importation of goods produced with forced labor.
An analysis by the law firm Morgan Lewis describes the move as preserving “much of the structure and economic effect” of the administration’s broader tariff program “while shifting to a different statutory foundation.” Unlike the IEEPA action, the Section 301 program was preceded by the full procedural apparatus the statute requires: investigations initiated on March 12 targeting the 60 partners, public hearings in April, consultations with more than 45 governments, an actionability determination on June 2, more than 1,600 public comments and testimony from over 100 witnesses at a second round of hearings in July.
The result is a program with the same silhouette as its predecessors but a very different legal skeleton. Where the IEEPA tariffs rested on a claimed emergency and the Section 122 duty on a balance of payments rationale, the new duties rest on 60 country specific investigative records, each documenting findings about forced labor import enforcement. USTR has framed the action as the largest coordinated use of American trade law against forced labor in history, and an accompanying agency release gathered praise from steelworkers, manufacturers and farm groups for what it called action to combat forced labor in global supply chains.
Critics see the human rights framing as scaffolding around a revenue and leverage program that predates it. They note that the rate a country pays correlates with whether it has signed an Agreement on Reciprocal Trade with Washington, that the exemption annexes track domestic supply concerns rather than forced labor exposure, and that the administration announced the replacement tariffs before most of the investigations were complete. That tension, between a defensible statutory record and an unmistakable continuity of economic design, is exactly what the pending litigation will probe.
What the New Data Show
Beneath the 7.1 percent headline figure, the USITC data reveal a tariff system with dramatic variation by partner and product.
China remains the most heavily tariffed major trading partner, facing an effective rate of 23.2 percent in June, though Penn Wharton notes this is a marked decline from previous months as the bilateral arrangement concluded last November continues to hold and various exclusions work through the system.
By product, steel and aluminum goods face the highest effective rates at 40.9 percent, reflecting Section 232 national security tariffs that were doubled from 25 to 50 percent in June 2025 and have survived the IEEPA litigation untouched, since they rest on a separate and repeatedly upheld statutory authority. Automotive vehicles face an effective rate of 13.2 percent.
Perhaps the most striking behavioral finding concerns North America. The share of imports from Canada and Mexico entering duty free under the United States-Mexico-Canada Agreement surged to 83.6 percent in June, up from stable and much lower levels through late 2024. Penn Wharton attributes the jump to importers “aggressively leveraging USMCA rules of origin to secure duty-free status and avoid higher tariff rates,” a compliance investment that has permanently changed how North American supply chains document origin.
The revenue arithmetic is equally revealing. Penn Wharton estimates the new tariffs raised $283.9 billion in gross customs revenue between January 2025 and June 2026. Had importers not accelerated purchases and shifted sourcing patterns, collections would have been $58.7 billion higher, a measure of how much trade flows bent around the duties. And because roughly $166 billion of the gross figure was collected under the invalidated IEEPA authority, with about $100 billion already certified for refund through July according to court filings, the durable net revenue from the entire tariff campaign shrinks to approximately $117.9 billion if all IEEPA collections are ultimately returned.
The China Exception That Held
The relative calm in the U.S.-China lane is one of the quieter revelations in the June data. The 23.2 percent effective rate on Chinese goods, while still the highest among major partners, reflects the one year economic and trade arrangement the two governments concluded in November 2025, under which Washington suspended its heightened reciprocal tariffs on Chinese imports through November 10, 2026 and extended expiring Section 301 exclusions to the same date, while Beijing suspended retaliatory measures, lowered its general rate on American exports to 21.9 percent and committed to purchase at least 25 million metric tons of U.S. soybeans in each of 2026, 2027 and 2028.
That arrangement survived both the Supreme Court ruling and the statutory reshuffling that followed, and Chinese goods sit outside the new forced labor Section 301 framework, which was built around the other 60 economies. A separate USTR proceeding, seeking public comment on a mechanism to promote balanced and reciprocal trade with China, is running on its own track, as is the semiconductor focused Section 301 action announced last December, which set an initial zero percent rate on a broad range of Chinese chips that is scheduled to rise in June 2027. For supply chain planners, the practical upshot is that China exposure is currently governed by the November arrangement’s calendar, with the next cliff on November 10, 2026.
The steadiness of the China numbers contrasts with the volatility elsewhere in the data, and analysts caution against reading it as permanence. The arrangement is explicitly temporary, its agricultural purchase commitments are subject to verification disputes, and the semiconductor tariff timetable was designed, in the words of analysts quoted by the South China Morning Post, to signal resolve and retain leverage rather than to deliver immediate economic impact.
A Tariff Wall With Deliberate Gaps
The new Section 301 regime is not a flat wall. The rate structure rewards trading partners that align with Washington’s forced labor enforcement agenda. A 10 percent rate applies to 17 economies that maintain, have committed to, or partially operate forced labor import bans, a list that includes India, Indonesia, Malaysia, Mexico, Canada and the United Kingdom. Most other investigated economies face 12.5 percent.
For several large developed partners, the duties are capped rather than stacked. Goods from the European Union and Taiwan generally face a combined most favored nation and Section 301 rate of no more than 10 percent, while the corresponding ceiling for Japan, Korea and Switzerland is 12.5 percent. Where existing MFN duties already meet those thresholds, no additional Section 301 duty applies at all.
The exemptions may matter as much as the rates. Products already covered by Section 232 measures, including steel, aluminum, copper, automobiles and automotive parts, are excluded from the new duties, as are USMCA qualifying goods from Canada and Mexico and a long annex of raw materials, energy products, agricultural goods and pharmaceutical inputs. USTR has said the carve outs are designed to avoid constraining domestic supply or causing economy wide disruption.
A further layer arrives next month. The administration has directed USTR to establish tariff rate quotas for textiles and apparel from Bangladesh, Cambodia, Indonesia and Malaysia, allowing duty free volumes tied to each country’s use of American cotton and textile inputs. USTR has indicated implementation should become feasible by September 1, with a Federal Register notice to set the quotas and effective date. Until then, those imports pay the 10 percent rate.
Meanwhile, the Section 232 side of the wall keeps growing. On August 6, the Commerce Department proposed adding 14 more steel, aluminum and copper derivative products to the 50 percent national security tariffs, a list that ranges from brass wind instruments and floor safes to tanker trailers and semi trailers, according to Supply Chain Dive’s review of the proposal.
The Legal Cloud Overhead
The question hanging over the entire structure is whether Section 301 can lawfully bear this much weight. The statute has historically been used against specific practices of individual trading partners, most prominently China’s technology transfer policies during the first Trump administration. It has never been used to impose near uniform duties on essentially all U.S. imports at once.
Two challenges are already on file at the Court of International Trade. The first was brought by spice importer Burlap and Barrel and California watch retailer Collective Horology, structured as a proposed class action on behalf of all importers of record paying the new duties. The plaintiffs argue that USTR failed to adequately explain imposing “near-uniform duties across 60 economies with materially different enforcement records and trade profiles,” and that Section 301 targets specific unfair practices rather than authorizing a flat tax on global imports.
The second suit, filed on behalf of seven businesses including Learning Resources and hand2mind, veterans of the successful IEEPA litigation, is blunter. It contends the forced labor rationale is a pretext for the administration’s third attempt to impose “essentially the same set of sweeping global tariffs” the Supreme Court already rejected.
Trade lawyers give the government better odds this time. Section 301 has survived decades of legal challenges, and the administration’s observance of the statute’s investigation, consultation and comment procedures deprives challengers of the process arguments that helped sink the IEEPA program. But the unprecedented scale, 60 simultaneous investigations covering nearly the entire import base, presents questions no court has answered, and the refund experience has taught importers to preserve their rights from day one.
The Fiscal Stakes
For the Treasury, the difference between the tariff program that was and the one that is amounts to tens of billions of dollars a year. At its 2025 peak, the effective tariff rate approached levels not seen since the 1930s, and monthly customs collections repeatedly set records. The post ruling structure collects less per dollar of imports, and the refund obligation has converted a large slice of past collections into a liability. Penn Wharton’s decomposition makes the point starkly: $283.9 billion in gross new revenue over eighteen months becomes roughly $117.9 billion once IEEPA refunds are netted out, before counting the administrative costs of processing more than 330,000 refund claimants or the indirect revenue effects of tariff driven price increases on income and payroll tax bases.
The behavioral findings carry their own fiscal lesson. The $58.7 billion gap between mechanical and actual collections measures how aggressively importers front loaded purchases, rerouted sourcing and re-engineered origin to escape the duties. Tariff revenue projections that assume static trade flows, a recurring feature of political debate over whether tariffs can fund tax cuts, overstate collections by design. The USMCA surge is the cleanest illustration: faced with a choice between paying duties and investing in rules of origin compliance, North American supply chains overwhelmingly chose compliance, moving five sixths of continental trade outside the tariff net entirely.
State level and sectoral effects are similarly uneven. Steel and aluminum consuming manufacturers face input costs elevated by the 40.9 percent effective rate on those products, a burden that lands on machinery, construction and appliance producers concentrated in the industrial Midwest. Agricultural exporters, meanwhile, are watching the China purchase commitments as the harvest approaches, aware that their market access is now an artifact of a truce with a November 2026 expiration date.
What Importers and Exporters Should Do Now
The practical playbook emerging from trade counsel has several elements. First, verify classification and country coverage at the tariff line level, because the exemption annexes are defined by specific Harmonized Tariff Schedule subheadings and differ by country; assuming a product is covered, or exempt, is the most common early mistake. Second, revisit origin engineering: the 83.6 percent USMCA utilization rate shows how much duty exposure can be managed through documentation and sourcing within existing rules. Third, track the litigation and pay under protest where warranted, keeping entry records organized so that any future invalidation converts cleanly into refund claims. Fourth, watch the September 1 textile quota implementation and the Commerce derivatives proposal, both of which will shift cost structures for affected sectors within weeks.
For exporters to the United States, the message in the June data is that the tariff wall is now more predictable but also more permanent looking. The rates are lower than the 2025 peaks, the legal foundation is stronger, and the administration has demonstrated that each judicial setback produces a rebuilt program within days.
The Calendar Ahead
The next six months are dense with dates that will move the numbers. September 1 is USTR’s target for implementing the textile and apparel tariff rate quotas for Bangladesh, Cambodia, Indonesia and Malaysia. September 22 brings the public hearing in the separate Section 301 investigation of Germany’s pharmaceutical pricing, the first test of whether the administration will extend its trade enforcement toolkit into allied health policy. The Commerce Department’s comment period on the proposed steel, aluminum and copper derivative expansions will close in the early fall, with new inclusions typically taking effect within weeks of a final notice.
At the Court of International Trade, briefing in the Burlap and Barrel and Learning Resources challenges is expected to move quickly, and both sides anticipate that whatever the trade court decides will be appealed to the Federal Circuit, and potentially beyond. Few observers expect final resolution before mid 2027, which means importers will pay the new duties for at least a year before learning whether they, too, will someday be refunded. November 10 brings the expiration of the China arrangement, with negotiations on an extension or successor expected to intensify after the harvest season. And through all of it, CBP will keep processing the remaining IEEPA refund claims, a workstream that court filings suggest will extend well into 2027.
Each of those events feeds back into the effective tariff rate that Penn Wharton will keep updating as new USITC data arrive. The July figures, the first to capture the new Section 301 duties, are expected in the early fall and should show the rate turning upward again.
The effective tariff rate of 7.1 percent is likely to climb in coming months as the July 24 duties feed into the data and the temporary distortions of the refund process wash out. What the August 10 numbers establish is the floor of the new normal: an American import tax burden roughly three times its level of early 2025, distributed unevenly across partners and products, and resting on a statute whose limits the courts have only begun to define.