USTR proposes 12.5% forced-labor Section 301 tariff before the July 24 cliff

USTR has proposed a 12.5% Section 301 tariff on all goods from 54 economies it found failed to enforce a forced-labor import prohibition, plus a 10% rate on six more that failed only to enforce one effectively. Public comments and hearings are scheduled for early July 2026. The timing isn't an accident. The duties are built to take over the moment the temporary 10% Section 122 surcharge expires on July 24, 2026.

This is the administration's answer to the hole the Supreme Court blew in its tariff program. After the Court ruled on February 20, 2026 that IEEPA didn't authorize the president's tariffs, the administration reached for Section 122 of the Trade Act of 1974 and put a 10% across-the-board surcharge on goods from nearly every country for 150 days. That clock runs out July 24. Per Dimerco's 2026 tariff tracking, USTR guidance has signaled all along that the replacement would come through expanded Section 301 and Section 232 authority, not another emergency statute.

Now we can see the shape of it.

What USTR actually proposed

The forced-labor Section 301 investigation covered roughly sixty economies and nearly all US imports. USTR's determination splits them. The 54 economies found to have failed to impose and effectively enforce a forced-labor import prohibition draw the proposed 12.5% rate, with carve-outs for countries that signed reciprocal framework agreements. The six found to have failed only to effectively enforce such a prohibition draw the proposed 10% rate.

Two mechanics matter more than the headline percentages.

First, the duties would apply to all products from a covered country, not a product list. Source from one of the 54, and the rate hits the whole line of goods from that origin. Second, the new Section 301 duties would not stack on top of Section 232. Metals articles already carrying a 25% or capped 232 rate keep their 232 treatment; the forced-labor rate lands on everything else.

USTR also floated a textile mechanism. A set volume of apparel and textile imports from certain countries would be allowed in at a reduced Section 301 rate. If you run a textile or apparel program out of an affected country, that allocation is the single most valuable thing in the notice, and it's open to comment now.

Why the July 24 date is the whole ballgame

The practical story here is a swap, not a new tax layer. On July 23, a huge share of imports carries the flat 10% Section 122 surcharge. On July 24, that surcharge is scheduled to disappear and, if USTR finalizes on schedule, be replaced by country-specific Section 301 rates of 12.5% or 10%.

For a country at 12.5%, your landed cost goes up relative to the surcharge it replaces. For a country at 10%, it's roughly a wash on the rate but a change in the legal basis, the HTS coding, and the Chapter 99 provision your entries reference. Either way, brokers face a coding change on a massive volume of entries with almost no lead time. Same crunch we flagged when Section 122 first went in.

There's a parallel track worth watching. USTR is also finishing a separate Section 301 investigation into structural manufacturing overcapacity across sixteen countries covering more than 75% of US imports, with final determinations expected in July per the Atlantic Council's tariff tracker. Some of your origins could end up touched by both proceedings. Model them independently.

What to do before the comment window closes

The early-July hearing schedule means the time to move is now, not after July 24.

• Pull your import volume by country of origin for the trailing twelve months and flag every origin on the 54-economy 12.5% list and the six-economy 10% list.
• For each flagged origin, calculate the delta against the current 10% Section 122 surcharge so you know where landed cost actually rises versus stays flat.
• Check whether your origin signed a reciprocal framework agreement that carries a carve-out from the 12.5% rate before you assume the full duty.
• Screen your metals entries: if goods carry a Section 232 rate, the forced-labor duty shouldn't stack, so don't double-count it in your model.
• If you import apparel or textiles from a covered country, read the textile mechanism and file a comment on the volume allocation. That's a number USTR can still move.
• Calendar July 24 as a coding cutover and get entry summaries staged so you're not re-filing under a new Chapter 99 provision on the fly.

Importers running their own entries should be modeling this duty exposure now rather than waiting for CBP implementing guidance, which on the June Section 232 metals revision was still pending well after the effective date.

One caution. These are proposed rates in an open proceeding. Country lists, carve-outs, and the textile volume can shift between the hearings and a final determination. But the July 24 expiration is fixed, and USTR has every incentive to have something in place by then to hold tariff revenue roughly level. Plan for the swap to happen on time, and treat any delay as upside.