A forced labor case gives the White House its most durable tariff wall yet, as new duties on 60 economies replace an expired stopgap and reset the cost of nearly every product entering the United States
WASHINGTON, July 25, 2026
The United States began collecting a sweeping new round of import tariffs on Friday, imposing duties of 10 percent or 12.5 percent on goods from 60 trading partners that together account for 99.4 percent of everything America buys from abroad. The action, announced Thursday by the Office of the United States Trade Representative and effective at 12:01 a.m. Eastern Time on July 24, lands at the precise moment a temporary 10 percent global surcharge expired, ensuring that the government’s tariff wall never came down for even a single day.
The new duties are the product of a Section 301 investigation into whether US trading partners adequately prohibit and enforce bans on imports made with forced labor. In the administration’s telling, they are a human rights measure and a trade remedy rolled into one. In practical terms, they are the third major architecture the White House has erected around US imports in less than 18 months, and by most legal assessments the most durable one yet.
“The United States has had a forced labor import ban for nearly a century, and rigorously enforces it; it’s well past time for our trading partners to do the same,” US Trade Representative Jamieson Greer said in a statement announcing the action, as reported by Time. “Today’s action will begin to correct what is both a human rights abuse and distortive trade practice to improve the welfare of workers everywhere.”
How the New Tariffs Work
The structure of the action divides America’s trading partners into two tiers. A 10 percent rate applies to 17 economies that, in USTR’s judgment, have made commitments to adopt and effectively enforce forced labor import prohibitions. Canada, Mexico, India and the United Kingdom sit in that lower band. The remaining economies face a 12.5 percent rate, a group that includes China, the European Union, Japan, South Korea, Taiwan, Australia and Brazil.
The list of covered economies reads like a map of the global economy: Algeria, Angola, Argentina, Australia, the Bahamas, Bahrain, Bangladesh, Brazil, Cambodia, Canada, Chile, China, Colombia, Costa Rica, the Dominican Republic, Ecuador, Egypt, El Salvador, the European Union, Guatemala, Guyana, Honduras, Hong Kong, India, Indonesia, Iraq, Israel, Japan, Jordan, Kazakhstan, Kuwait, Libya, Malaysia, Mexico, Morocco, New Zealand, Nicaragua, Nigeria, Norway, Oman, Pakistan, Peru, the Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Sri Lanka, Switzerland, Taiwan, Thailand, Trinidad and Tobago, Turkiye, the United Arab Emirates, the United Kingdom, Uruguay, Venezuela and Vietnam. Counting the 27 member states of the EU individually, the action touches more than 80 countries.
One technical feature of the Federal Register notice may prove as consequential as the headline rates. For imports from economies with existing most-favored-nation duties, including the EU, Japan and South Korea, the new tariff is charged net of the MFN rate. In plain language, the combination of the Section 301 tariff and the normal MFN duty will not exceed 10 percent or 12.5 percent, depending on the country, unless the MFN duty already sits above that threshold.
Trade professionals seized on that detail immediately. “Those three words, ‘net of MFN,’ may end up being the biggest story in the entire announcement,” Pete Mento, director of global trade advisory services at Baker Tilly, wrote in a LinkedIn post cited by Supply Chain Dive. “If it works the way it appears, this isn’t simply another tariff stacked on top of existing duties. It could fundamentally change how the Section 301 duty is calculated for those products.”
The action also carries a long list of exemptions. Numerous agricultural goods are excluded, as are products already subject to Section 232 national security tariffs, such as steel and aluminum. Oil and gas, fertilizer and certain food items fall outside the new duties, according to reporting by Reuters and US News. Country-specific carve-outs appear throughout the annexes, including certain textiles from Malaysia and whiskey from the United Kingdom. Informational materials, donations and accompanied baggage are also outside the scope, per a USTR fact sheet.
For cargo already in motion, the notice provides a transition window. Goods loaded on a vessel before Friday, July 24 and entered for consumption before July 28 will not face the new levies, a rule that gave importers a narrow but meaningful opportunity to clear inbound freight under the old regime.
A Wall Rebuilt After the Supreme Court Tore One Down
To understand why Washington is imposing tariffs through a forced labor investigation, one has to rewind to February. On February 20, the Supreme Court held in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act does not authorize the president to impose tariffs, striking down the so-called Liberation Day duties of 10 to 50 percent that had defined US trade policy through 2025.
The administration responded within days. On February 24, it invoked Section 122 of the Trade Act of 1974, a rarely used balance-of-payments provision, to impose a temporary import surcharge of 10 percent across the board. Section 122 comes with a hard statutory limit: 150 days, unless Congress extends it. Congress did not. That clock ran out on Friday, and the forced labor tariffs were timed to the hour to take its place.
The choreography was not lost on observers. The new duties took effect at the very moment the old ones lapsed, and the administration made no secret of the design. Bloomberg described the move as Trump rebuilding his tariff wall, while NPR noted that the president “keeps finding a way to implement his tariff policy” despite repeated legal setbacks.
Meanwhile, the wreckage of the first wall is still being cleared. After the Supreme Court ruling, the Court of International Trade ordered US Customs and Border Protection to refund the unlawfully collected IEEPA duties. By late May, CBP reported it was in the process of returning approximately 85 billion dollars, and law firm summaries indicate the agency processed refunds on nearly 8.5 million entries in the first six weeks of the program. The Justice Department has appealed parts of the refund order to the Federal Circuit, contesting whether the trade court can compel refunds on entries that have already liquidated. Importers, in other words, are simultaneously collecting refunds from the last tariff regime and paying duties under the new one.
The Forced Labor Rationale
USTR launched its Section 301 investigation into foreign forced labor regimes on March 12, and the process moved at extraordinary speed by trade remedy standards: two rounds of public hearings, written comments, engagement with dozens of governments, findings released in early June, proposed rates later that month, and final action on July 23.
The legal foundation is Section 307 of the Tariff Act of 1930, which prohibits importing goods made wholly or in part with forced labor, convict labor or indentured child labor. The administration’s argument is that the United States enforces that prohibition while most of its trading partners maintain no equivalent ban, or maintain one on paper without enforcing it. That asymmetry, USTR contends, is both a moral failure and an unfair trade practice, because producers who exploit forced labor gain a cost advantage over American firms that cannot.
“Despite longstanding international consensus that this practice must be eliminated, the prevalence of forced labor persists worldwide and has even escalated in recent years,” the USTR fact sheet accompanying the action states. The International Labour Organization estimates that roughly 28 million people were in forced labor worldwide as of its most recent global count.
A senior administration official, briefing reporters ahead of the announcement, described the measure as “the most sweeping international labor rights action the United States has ever taken, that any country has ever taken,” according to Time. The official argued the tariffs would encourage stronger labor rights enforcement abroad, restore fairness for American workers and incentivize partners to join the United States in eliminating forced labor from global supply chains.
There is some evidence the incentive structure is already working as designed. Politico reported that several countries lowered their proposed rate between June and July by moving to enforce forced labor import bans after the preliminary determinations were published. The two-tier design gives every covered economy a standing offer: adopt and enforce a ban, and the rate falls.
Skeptics Question Both the Means and the End
Not everyone accepts the framing, and the legal community is already handicapping the next courtroom fight. Alan Wolff, a senior fellow at the Peterson Institute for International Economics and a former deputy director-general of the World Trade Organization, wrote in a note published Thursday that the new duties represent “another case of presidential overreach” and predicted that “if they were challenged in court, the Supreme Court would likely overturn them.” Wolff argues the Constitution assigns tariff policy to Congress and that a tariff applied to essentially all goods from 60 economies stretches Section 301, which is designed to remedy specific unfair practices, beyond recognition.
Trade lawyers point out, however, that Section 301 stands on firmer footing than IEEPA ever did. The statute explicitly authorizes duties, it survived challenges during the China tariff litigation of the first Trump term, and the administration followed the procedural steps the statute prescribes: investigation, hearings, findings, determination. Even critics concede that unwinding these tariffs in court would take years, during which the duties would continue to be collected.
The substantive critique is different: that a blanket tariff is a blunt instrument for a labor rights problem. Several of the covered economies maintain what experts consider strong forced labor regimes. The European Union adopted a regulation banning products made with forced labor from its market beginning in December 2027. Canada, Mexico and the United Kingdom all prohibit such imports. New Zealand’s trade minister, Todd McClay, rejected the premise outright, telling Radio New Zealand that forced labor “doesn’t happen through our trade” and accusing Washington of “looking for any way to put a tariff rate back on.”
Markets Shrug, Then Sort Winners From Losers
Financial markets absorbed the news with relative calm, in part because the new rates roughly match the surcharge they replaced. On Friday, the Dow Jones Industrial Average rose about half a percent, the S&P 500 finished marginally higher and the Nasdaq Composite slipped 0.6 percent, according to Yahoo Finance market reports. The semiconductor group was the session’s clear casualty, sinking 4.3 percent as investors weighed tariff friction on top of an already jittery artificial intelligence trade. All three major indexes posted weekly losses, led by a 2 percent decline in the Nasdaq.
Currency strategists noted that the dollar held firm as the tariffs took effect, with analysts at Invezz describing dollar strength as the cleanest expression of a risk-off, trade-friction environment. The prevailing market view is that duties on 60 partners raise the odds of slower global growth while keeping US financial conditions tight.
The muted equity reaction masks a more complicated picture beneath the surface. The expired Section 122 surcharge was a flat 10 percent on everything. The new regime is 10 percent for some countries, 12.5 percent for others, zero for exempted product categories, and calculated net of MFN for several major partners. For any individual importer, the effective rate on a given product may have gone up, gone down or disappeared entirely on Friday morning. Mexico’s economy minister, Marcelo Ebrard, captured the continuity case, saying his country will “see no change in the effective tariff that Mexico pays” because “one replaces the other, so tariff treatment is maintained.”
What Importers and Exporters Need to Do Now
For US importers, the immediate task is reclassification and recalculation. Companies that spent the spring building landed-cost models around a flat 10 percent surcharge now need country-by-country, product-by-product analysis. The first step is determining whether each imported article appears on the exemption annexes. The second is establishing which tier the country of origin falls into. The third, for goods from MFN-rate economies such as the EU, Japan and South Korea, is applying the net-of-MFN calculation, which in some cases will produce a lower total duty than importers paid last week.
The transition rule deserves particular attention. Freight loaded before July 24 must be entered for consumption before July 28 to escape the new duties, a window that closes Tuesday. Customs brokers were reporting a scramble on Friday to accelerate entries on qualifying cargo.
Documentation discipline will separate smooth entries from expensive ones. Country of origin determinations, always consequential, now carry a 2.5 point spread between tiers, enough to make origin engineering and substantial transformation analysis worth revisiting for multi-country production chains. Importers should also revisit their use of foreign trade zones, bonded warehouses and duty drawback programs, tools that regained relevance under the 2025 regimes and remain useful under this one. And because the forced labor rationale underpins the entire structure, supply chain traceability obligations are likely to intensify: an importer that cannot document its upstream labor conditions may find itself exposed not only to these tariffs but to detention under Section 307 itself.
There are also unresolved questions. The administration imposed separate new tariffs on Canada and Brazil in the past two weeks, including a 25 percent Section 301 duty on most Brazilian goods announced earlier in July, and three proclamations signed July 20 adding a 50 percent duty on Canadian goods effective August 19. Thursday’s Federal Register filing did not explain how the forced labor tariffs interact with those country-specific measures, leaving importers from America’s largest and eleventh-largest trading partners without clear stacking guidance. Trade counsel expect CBP messages in the coming days to resolve the mechanics.
Exporters and foreign suppliers face a different calculus: whether to absorb the duty, share it or pass it through. Experience under the 2025 tariffs suggests most of the cost ultimately lands on US importers and consumers. Studies of the earlier rounds consistently found American buyers bearing the economic incidence, a finding the administration disputes but that shapes how foreign sellers negotiate.
The Economic Arithmetic
The macroeconomic effect of the new wall depends on a question economists have been arguing about for eighteen months: who actually pays. The administration maintains that foreign producers absorb the duties by cutting prices to preserve market share. The weight of academic evidence from the 2018-2019 tariffs and the 2025 rounds points the other way, showing near-complete pass-through of tariff costs to US import prices, with the burden split between importing firms’ margins and consumer prices.
At the new rates, the revenue stakes are substantial. A duty of 10 to 12.5 percent applied across virtually all non-exempt imports from 60 economies represents one of the largest tax events of the year, even after accounting for the exemption annexes. Customs revenue under the various 2025 and 2026 regimes has already transformed CBP into one of the government’s most significant collection agencies, even as it simultaneously refunds the 85 billion dollars collected under the struck-down IEEPA program.
For inflation watchers, the timing matters more than the level. Because the new duties replace an expired 10 percent surcharge rather than adding to it, the incremental price pressure is concentrated in the 2.5 point step-up applied to the higher tier, and in product categories that were exempt under Section 122 but covered now, or vice versa. Economists at several banks characterized the transition as roughly neutral for the aggregate price level but meaningful for specific categories, with electronics and consumer goods from 12.5 percent countries facing the largest step-up. The Federal Reserve, which has spent the year parsing tariff effects out of its inflation readings, gains one more structural break to model.
The growth channel runs through uncertainty as much as price. The Bank of France’s Moulin captured the consensus among foreign policymakers that the action “creates more uncertainty for world trade and clearly it’s not favourable for growth.” Business investment surveys through the spring showed capital spending decisions repeatedly deferred pending tariff clarity, and Friday’s action, durable as it may be, arrives with a fresh set of unknowns: the unresolved stacking rules, the pending excess capacity case and the certainty of litigation.
More Waves Are Coming
Perhaps the most important message in Thursday’s action is what it signals about the pipeline. USTR launched a second sweeping Section 301 investigation the same week as the forced labor probe, this one examining whether 16 trading partners, including China, the EU and Mexico, are creating structural excess capacity in manufactured goods and diminishing US advantages in global markets. Findings have not yet been released. If the forced labor case is the template, the excess capacity case could support another broad tranche of duties before the end of the year.
The administration has, in effect, converted Section 301 from a scalpel into a foundation. Where the first Trump term used the statute to target China’s technology transfer practices, the second is using it to rebuild a near-global tariff wall on legal ground the Supreme Court has not yet tested. Each investigation supplies a distinct rationale, forced labor today, excess capacity perhaps tomorrow, and each rationale carries its own two-tier incentive structure designed to reward alignment with US policy.
For the businesses that move 3.3 trillion dollars of goods into the United States each year, the strategic conclusion is uncomfortable but unavoidable: tariff planning is no longer episodic crisis response. It is a permanent operating discipline. The wall came down in February. It went back up in 48 hours. On Friday it was rebuilt again, taller in places, with new doors for countries willing to meet Washington’s terms, and there is every indication that construction will continue.