A single clause buried in a 1974 trade law let the administration put duties on 99.4% of American imports, four months after the Supreme Court struck down its last attempt. Here’s what happened, step by step.
At 12:01 a.m. Eastern on Friday, July 24, a 10% tariff on nearly everything the United States imports quietly expired. At the same minute, a new tariff of 10% to 12.5% on nearly everything the United States imports took effect.
This was the same scope at nearly the same rate. An entirely different statute and an entirely different justification. The expiring duty was a balance-of-payments measure. The replacement is a forced labor measure.
That substitution is the most consequential thing about the new tariffs, and the least understood. The administration did not simply decide to tax imports over forced labor. It went looking for a law that would let it tax nearly all imports at once, and forced labor was the door that opened.
What actually took effect
On July 23, U.S. Trade Representative Jamieson Greer issued a final determination in 60 parallel investigations into whether America’s largest trading partners have failed to ban, or failed to enforce a ban on, imports made with forced labor. The answer, in all 60 cases, was yes.
The resulting duties cover the top 60 U.S. trading partners, which together account for 99.4% of American imports. The rate structure is layered:
- A flat 10% stacked on existing duties for 17 partners, including Canada, Mexico, India, the United Kingdom, Indonesia, Bangladesh, Malaysia, Cambodia, Argentina, Guatemala, El Salvador, Honduras, Ecuador, Jordan, Sri Lanka, Pakistan and Trinidad and Tobago.
- A capped combined 10% for the EU and Taiwan, and a capped combined 12.5% for Japan, South Korea and Switzerland, meaning the Section 301 duty fills the gap up to that ceiling rather than stacking on top of it.
- A flat 12.5% stacked on existing duties for everyone else, including China and Vietnam.
Exemptions are extensive. USMCA-qualifying goods from Canada and Mexico are out. So are goods already covered by Section 232 national security tariffs, DR-CAFTA textiles and apparel, pharmaceuticals and their ingredients, and civil aircraft parts. After a second public comment round, USTR added several hundred more carve-outs: unflavored instant coffee, pig iron, vanadium oxides, fertilizer inputs, semiconductor manufacturing equipment, worn clothing, certain antiques. There are also country-specific exclusion lists for thirteen partners, and USTR says it will build special tariff-rate quotas for textiles from Bangladesh, Cambodia, Indonesia and Malaysia.
The clause that made this a reality
The authority is Section 301 of the Trade Act of 1974, formally, Title III, codified at 19 U.S.C. §§ 2411–2420. It is the same statute Trump used in his first term to tariff $370 billion in Chinese goods over intellectual property practices, and those duties are still in place.
Section 301 lets the U.S. Trade Representative respond to foreign conduct that is “unjustifiable,” “unreasonable,” or “discriminatory” and that burdens or restricts U.S. commerce. USTR invoked the discretionary branch of that authority, which requires two findings: that a foreign act, policy or practice is unreasonable or discriminatory and burdens or restricts U.S. commerce, and that action by the United States is appropriate.
“Unreasonable” is defined in the statute as conduct that, “while not necessarily in violation of, or inconsistent with, the international legal rights of the United States, is otherwise unfair and inequitable.” That is broad on its face. But Congress went further and listed examples, and one of them is the hinge on which this entire action turns. Unreasonable acts, the statute says, “include, but are not limited to, any” that constitute:
“a persistent pattern of conduct that … permits any form of forced or compulsory labor.”
That language has sat in the U.S. Code for decades without being used this way. It is what converts a labor-rights concern into a tariff trigger and, critically, it is a category broad enough to reach almost every country on earth simultaneously, which is not true of most of the other hooks in the statute.
Why this statute, and why now
The sequence matters. In April 2025, Trump imposed near-global tariffs under the International Emergency Economic Powers Act. In February 2026, the Supreme Court struck them down, holding that IEEPA does not authorize tariffs at all.
Within days, the administration announced a replacement: a temporary 10% global surcharge under Section 122 of the same 1974 Trade Act, a balance-of-payments provision. Section 122 has a hard statutory ceiling of 150 days, and the clock started February 24. It would run out on July 24 no matter what happened in court. (The Court of International Trade, hearing a separate challenge, found the United States did not have a balance-of-payments problem of the kind the statute describes.)
On February 20, 2026, days after the IEEPA ruling and before the Section 122 tariff had even taken effect, Greer publicly announced that USTR would open a series of Section 301 investigations “to cover most major trading partners,” naming forced labor, industrial excess capacity, pharmaceutical pricing, digital services taxes, ocean pollution and seafood among the targets.
The forced labor investigations opened March 12. USTR self-initiated them, which the statute permits; no outside petition was required. Section 301 normally allows twelve months to complete an investigation; Greer pledged an “accelerated timeframe.” The record was nonetheless substantial: two rounds of public comment, hearings in late April and again July 7–9, and more than 2,100 submissions. Findings and proposed tariffs came June 2. Final action came July 23. The duties began the following minute after Section 122 lapsed.
What USTR had to prove, and how it got there
The June report made two findings. First, that six partners: Canada, Ecuador, the EU, Indonesia, Mexico and Pakistan, have forced-labor import prohibitions but do not effectively enforce them, while the remaining 54 have not adopted one at all.
Second, and legally harder, is that these failures burden or restrict U.S. commerce. USTR’s theory is twofold: American producers face unfair competition from goods made with forced labor abroad, and when other countries decline to block such goods, clean foreign production gets displaced out of those markets and into the United States.
Note the structural feature here. The United States is not tariffing goods made with forced labor. It has banned those since 1930, under Section 307 of the Tariff Act, and U.S. Customs and Border Protection enforces it, issuing withhold release orders in June 2026 against Serbian copper and Jordanian apparel. What is new is a tariff on countries for their regulatory posture toward a third party’s goods. In trade law, that structure is called a secondary sanction, and it is the feature critics have seized on hardest.
The rates and what they track
USTR’s stated logic is that partners that have committed to adopt and enforce prohibitions get 10%, and those that have not get 12.5%. But the assignment does not map cleanly onto the enforcement findings. The 10% tier includes not only the six non-enforcers but also the United Kingdom and partners that made forced-labor commitments in recent Agreements on Reciprocal Trade with Washington, such as Argentina, Bangladesh, Cambodia, El Salvador, Guatemala, Malaysia, Taiwan, and Indonesia among them. Between the June proposal and the final action, USTR moved additional countries down into the lower tier.
Supporters read this as evidence the pressure is working: USTR says ten partners have agreed to enact bans through trade agreements, and others adopted prohibitions during the investigation window itself. Critics read the same facts differently, arguing the rates track what each economy has promised the United States on trade generally rather than its forced-labor record specifically.
Where the legal fight will be fought
Importers sued almost immediately at the U.S. Court of International Trade, which has exclusive first-instance jurisdiction. Among the plaintiffs are the spice importer Burlap and Barrel and the watch retailer Collective Horology, with the Liberty Justice Center, which also litigated the IEEPA challenge, involved. They seek both removal of the duties and refunds. Appeals go to the Federal Circuit.
Four questions are likely to decide it.
Does the conduct fit the clause?
The statute reaches a “persistent pattern of conduct that … permits” forced labor. Congressional researchers note there is no case law construing that phrase, and that it is not obvious a country’s failure to block imports produced elsewhere amounts to permitting forced labor. There is also a drafting argument in both directions: “include, but are not limited to” suggests other forced-labor conduct might qualify, while Congress’s decision to specify a “persistent pattern” may imply that lesser conduct does not.
Is the record adequate?
Because Section 301 vests authority in USTR rather than the President, courts review these actions under the Administrative Procedure Act, the “arbitrary and capricious” and “substantial evidence” standards, rather than the far more deferential review given presidential tariff decisions. Challengers argue the findings across 60 economies are conclusory, that no country-by-country burden analysis was done, and that the accelerated schedule left insufficient time to answer significant comments. USTR counters that country-specific findings were unnecessary to establish that these partners lack enforced prohibitions, and that the statute gives it wide latitude to choose “appropriate and feasible action.”
Does the major questions doctrine apply?
Prior Section 301 actions have almost always targeted a single country. Applying it to 60 economies covering more than 99% of U.S. imports may qualify as the kind of “unheralded” and “transformative” expansion the Supreme Court has said requires clear congressional authorization. The administration’s strongest reply is that, unlike IEEPA, Section 301 explicitly authorizes tariffs and sets no cap on the rate or on the number of partners covered.
How much does precedent help?
In HMTX Industries v. United States, decided in September 2025, the Federal Circuit upheld USTR’s expansion of the China tariffs, and the Supreme Court denied review on June 15, 2026. That reads as latitude for USTR to modify Section 301 actions. The lower-court history is also instructive: when the CIT found USTR had inadequately answered comments, it did not vacate the tariffs; it remanded for better justification, and then upheld them.
What comes next
Section 301 actions terminate automatically after four years unless a benefiting domestic industry asks for continuation. USTR can also modify or end them earlier if the underlying conduct changes or the action is “no longer appropriate.”
Congress retains formal power here. It could amend Section 301, or attempt a Congressional Review Act resolution of disapproval. But CRA fast-track procedures generally depend on the agency submitting the action to Congress, and USTR has not submitted past Section 301 actions. That would likely leave it to the Government Accountability Office to determine whether a final Section 301 action counts as a rule at all.
And the forced labor investigation is only the first of the set Greer announced in February. A parallel Section 301 investigation into “structural excess capacity” in 16 economies: all of them also named in the forced labor action, remains open, with no findings released. Pharmaceutical pricing, digital services taxes, seafood and ocean pollution are still on the list.
Whatever the courts decide about this particular clause, the underlying strategy is now visible: not one statute doing all the work, but a rotating set of narrower authorities, each with its own investigatory record, arriving in sequence.
Sources: USTR final action and fact sheet (July 23, 2026); USTR Federal Register notice, Annexes I–II; Congressional Research Service Legal Sidebar LSB11460 (July 21, 2026); Wiley Rein client alert (July 27, 2026); Kelley Drye & Warren, Trade and Manufacturing Monitor (March 13, 2026); Peterson Institute for International Economics (Wolff, July 23, 2026); Supply Chain Dive; The Hill; Fortune; NPR; Washington Post; TIME.