Forced-labor tariffs on 60 economies: what importers are paying three months in
The Section 301 action that replaced the expired 10% global surcharge in July adds 10% or 12.5% to imports from most trading partners, with wide exemptions procurement teams should be using.
Article summary
- Why it matters: The forced-labor tariff is now the broadest new duty on U.S. imports, touching suppliers in 60 economies. Its exemptions are just as broad, which means many buyers are either overpaying or overestimating their exposure.
- What to do first: Audit your exemption claims. USMCA qualification and the U.S.-manufacturing-input exemption are the two most valuable carve-outs. Make sure your broker is claiming them where eligible.
- Compare like-for-like sourcing options. A 2.5-point gap between, say, Vietnam and Malaysia can tip a sourcing decision at scale.
- 60
- economies covered
- 10%
- rate where import bans exist
- 12.5%
- rate for China, Vietnam and 36 more
- July 24
- effective date
On this page
The details
How we got here. After the Supreme Court invalidated the IEEPA-based “reciprocal” tariffs on Feb. 20, 2026, the administration imposed a 10% global surcharge under Section 122 of the Trade Act of 1974 starting Feb. 24. That statute caps such surcharges at 150 days, and Congress did not extend it, so it expired on July 24.
The same day, a new Section 301 action took effect. USTR finalized it on July 23 after investigating forced-labor import policies across 60 economies, according to Holland & Knight.
The rates fall into four groups. USTR’s final list, as summarized by EY, puts 19 economies at 10% and 41 at 12.5%:
| Group | Additional duty | Examples |
|---|---|---|
| Economies with (or committed to) forced-labor import bans | 10%, stacked on other duties | Canada, Mexico, India, Indonesia, Malaysia, Bangladesh, UK |
| Combined-rate partners | 10% total, net of MFN | EU, Taiwan |
| Combined-rate partners | 12.5% total, net of MFN | Japan, South Korea, Switzerland |
| All others | 12.5%, stacked | China, Vietnam, Brazil, Thailand, the Philippines and others |
Note: Holland & Knight’s country table shows 13% for some economies where its text says 12.5%. Confirm the rate in the official USTR notice before relying on either.
Exempt: goods already under Section 232 (metals, autos, pharmaceuticals and others), USMCA-qualifying imports, inputs used in U.S. manufacturing, agricultural goods not produced domestically in sufficient quantities, and several other categories including raw materials and supply-constrained products.
Not permanent by design. A country’s rate can fall from 12.5% to 10%, or be lifted, if USTR finds it is effectively enforcing a forced-labor import ban.
Where the 10% and 12.5% lines fall for common sourcing countries:
| Region | 10% | 12.5% |
|---|---|---|
| North America | Canada, Mexico | — |
| South and Southeast Asia | India, Indonesia, Malaysia, Bangladesh, Cambodia, Pakistan, Sri Lanka | Vietnam, Thailand, the Philippines, Singapore |
| East Asia | Taiwan (capped) | China, Hong Kong; Japan and South Korea (capped) |
| Europe | EU (capped), UK | Switzerland (capped), Norway, Turkiye |
| Latin America | Argentina, Ecuador, El Salvador, Guatemala, Honduras | Brazil, Chile, Colombia, Costa Rica, Peru, Dominican Republic |
“Capped” means the combined normal duty plus Section 301 duty stops at 10% (EU, Taiwan) or 12.5% (Japan, South Korea, Switzerland); goods with a normal duty at or above the cap pay nothing extra. USTR will also set three-year tariff-rate quotas for textiles from Bangladesh, Cambodia, Indonesia and Malaysia to encourage U.S.-origin textile inputs.
Codes to check on your entries. Additional duties are reported under HTSUS 9903.05.20 through 9903.05.84, standard exclusions under 9903.05.85 through 9903.05.92 and country-specific carve-outs under 9903.05.94 through 9903.06.21. Ask your broker which codes appear on your entries; missing exclusion codes are the quickest sign you are overpaying.
The exemption categories. Beyond Section 232 goods, USTR exempted products in five policy groups: raw materials whose tariffs could cause U.S. shortages; products that could disrupt the wider economy; products not available in sufficient quantities from the U.S. or elsewhere; products where an exemption encourages countries to adopt forced-labor import bans; and products where a tariff would not address the practices at issue.
The in-transit rule and what else is excluded. Goods loaded on a vessel and in transit before 12:01 a.m. on July 24 qualified for the old treatment if entered before 12:01 a.m. on July 28, according to EY. Informational materials, donations and accompanied baggage are also excluded. The final action followed USTR’s June 2 determinations and proposed measures. EY’s checklist for importers adds two steps beyond classification and origin: assess how the duty interacts with Section 232 and other Section 301 measures, and consider customs valuation planning and changes to the operating model to reduce exposure.
A sourcing comparison, worked through
Take a product with a 4% normal duty bought from Vietnam, Malaysia or Germany. The added forced-labor duty would be 12.5% from Vietnam (16.5% total), 10% from Malaysia (14% total) and 6% from Germany, since the EU combined rate is capped at 10%. On $1 million of annual purchases, that is a $25,000 a year swing between Vietnam and Malaysia and $65,000 between Vietnam and Germany, before freight and unit price. This is our illustrative calculation; check your classifications and any other duties that apply.
Total duty by normal rate and country group
How much extra you pay depends on the product’s normal (MFN) duty, because the capped groups net it out and the stacked groups add on top:
| Normal duty | EU, Taiwan (capped at 10%) | Japan, South Korea, Switzerland (capped at 12.5%) | 10% stacked group (e.g. Mexico, India) | 12.5% stacked group (e.g. China, Vietnam) |
|---|---|---|---|---|
| 0% | 10% | 12.5% | 10% | 12.5% |
| 2% | 10% | 12.5% | 12% | 14.5% |
| 5% | 10% | 12.5% | 15% | 17.5% |
| 8% | 10% | 12.5% | 18% | 20.5% |
| 12% | 12% | 12.5% | 22% | 24.5% |
These are our calculations before any exemption, and before other duties such as Section 301 China duties. USMCA-qualifying goods from Canada and Mexico pay none of the forced-labor duty. The pattern matters for sourcing: for products with a higher normal duty, Europe and Japan become relatively cheaper sources than the stacked groups.
An exemption checklist for your broker
- Section 232 goods. Are any of our products covered by a Section 232 action, and is that reflected on the entry?
- USMCA. Are qualifying Canadian and Mexican goods claimed as USMCA-originating?
- U.S. manufacturing inputs. Which of our imports are inputs to U.S. production, and are we claiming that exclusion with the right code?
- Policy-group exclusions. Do any products fall under the raw material, supply-constrained or other exclusion groups?
- Exclusion codes. Do our entries show a code in the 9903.05.85 to 9903.06.21 range where an exclusion applies?
What procurement teams should do
- Audit your exemption claims. USMCA qualification and the U.S.-manufacturing-input exemption are the two most valuable carve-outs. Make sure your broker is claiming them where eligible.
- Compare like-for-like sourcing options. A 2.5-point gap between, say, Vietnam and Malaysia can tip a sourcing decision at scale.
- Track country status changes. When a supplier country moves to the 10% tier or off the list, your landed cost changes overnight. Build that into quarterly cost reviews.
- Stack carefully. For China-origin goods, this layer sits on top of existing Section 301 China duties. The expiring China exclusions make the stack heavier from Nov. 10.
What to watch next
- Official rate tables. Confirm country rates in the USTR notice; summaries disagree for some economies.
- New forced-labor import bans. Countries that adopt bans can move into the 10% group, which changes landed-cost comparisons between sourcing countries.
- Exemption audits. Expect customs scrutiny of USMCA and Section 232 exemption claims; documentation will matter.
The bigger picture
This action ties tariffs to a compliance standard rather than to a trade deficit, which changes how procurement should think about supplier countries. A country’s labor-enforcement policy is now a cost input. Expect supplier due diligence, already pushed by the Uyghur Forced Labor Prevention Act, to become a pricing lever as well as a compliance requirement.
Questions procurement teams are asking
What are the Section 301 forced-labor tariffs?
An action that took effect July 24, 2026, adding 10% or 12.5% to imports from 60 economies after the Section 122 global surcharge expired.
Which goods are exempt from the forced-labor tariffs?
Goods already covered by Section 232 tariffs and USMCA-qualifying imports, among other exemptions. Check the official USTR notice for your products.
How does the EU cap work under the forced-labor tariff?
For the EU and Taiwan, the normal duty plus the Section 301 duty is capped at 10%, so a product with a 4% normal duty pays 6% extra and a product already at 10% or more pays nothing extra. Japan, South Korea and Switzerland work the same way with a 12.5% cap.
Does the Section 301 forced-labor tariff apply to USMCA goods?
No. USMCA-qualifying imports from Canada and Mexico are exempt, along with Section 232 goods, inputs used in U.S. manufacturing and several other categories.
How does the cap work for EU goods under the forced-labor tariff?
For EU and Taiwan goods, the normal duty plus the Section 301 duty stops at 10% combined. A product with a 4% normal duty pays 6% extra; one with a normal duty of 10% or more pays nothing extra.
How we reported this
This analysis draws on 4 sources, listed below, and reflects figures as reported on October 12, 2026. The sections on why it matters and what procurement teams should do are Procurement Signal analysis. It is not legal or financial advice. See our editorial standards.
