Section 301 Replaced the Global Tariff. Here Is How the New System Works

The 10% surcharge that sat on almost every U.S. import since February came off at 12:01 a.m. EDT on July 24, 2026. A new duty regime took effect at the same minute.

Section 122 of the Trade Act of 1974 caps a balance-of-payments surcharge at 150 days, and Congress did not extend it. USTR replaced it with Section 301 duties covering 60 economies. For anyone repricing landed cost, two things changed: a single flat rate became four different treatments depending on origin, and the automatic statutory expiration date went away.

What replaced the Section 122 tariff on July 24, 2026?

Section 122’s 10% global surcharge expired by operation of law at 12:01 a.m. EDT on July 24, 2026, 150 days after it took effect. At the same moment, new Section 301 tariffs of 10% or 12.5% ad valorem took effect on covered goods from 60 economies that USTR found had failed to adopt or effectively enforce a prohibition on imports made with forced labor. USTR puts the coverage at the top 60 U.S. trade partners, representing 99.4% of U.S. imports.

The sequence behind it runs back to February. The Supreme Court held on February 20, 2026 that IEEPA does not authorize tariffs. Section 122 was invoked four days later as the replacement authority, effective February 24. USTR opened 60 forced labor investigations on March 12, issued determinations on June 2, held hearings in early July, and took final action on July 23, hours before the Section 122 clock ran out.

We covered the setup for this in Two New Section 301 Investigations, 60+ Countries, and a July Deadline. The prediction there held: the surcharge did not simply disappear, and the replacement is more targeted and has no equivalent fixed sunset.

The four rate treatments, by origin

Section 122 applied one rate to nearly everything. The replacement sorts the 60 economies into four groups, so a landed-cost model built on a single number will now be wrong in both directions depending on where the goods come from.

Treatment	Rate	Economies
Flat 10%	10% additional ad valorem	Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, United Kingdom (17)
Combined rate capped at 10%	MFN plus Section 301, ceiling 10%	European Union, Taiwan (2)
Combined rate capped at 12.5%	MFN plus Section 301, ceiling 12.5%	Japan, South Korea, Switzerland (3)
Flat 12.5%	12.5% additional ad valorem	Algeria, Angola, Australia, The Bahamas, Bahrain, Brazil, Chile, China, Colombia, Costa Rica, Dominican Republic, Egypt, Guyana, Hong Kong, Iraq, Israel, Kazakhstan, Kuwait, Libya, Morocco, New Zealand, Nicaragua, Nigeria, Norway, Oman, Peru, Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Thailand, Türkiye, United Arab Emirates, Uruguay, Venezuela, Vietnam (38)

Section 301 forced labor tariff rate treatments effective 12:01 a.m. EDT July 24, 2026. Source: Presidential memorandum and USTR final action of July 23, 2026.

The capped group works differently from the flat group and is worth reading closely. For the EU and Taiwan, the combined MFN and Section 301 duty is set at 10% and does not exceed it. For Japan, South Korea and Switzerland, the ceiling is 12.5%. Where the MFN rate on a product already meets or exceeds the ceiling, the additional Section 301 rate is zero. Where the MFN rate is lower, the Section 301 layer fills the gap up to the cap.

For products from those five partners carrying specific or compound MFN rates rather than pure ad valorem rates, the ad valorem equivalent is calculated by dividing the MFN duty payable by the customs value of the good.

China deserves separate attention. The 12.5% is additive, not a substitute. Existing China List 1 through 4A Section 301 duties remain in place, and the new duties do not displace applicable antidumping, countervailing or other duty obligations. For affected Chinese goods, the new layer may therefore stack with existing China-specific Section 301 duties and any applicable trade-remedy duties, producing particularly high cumulative exposure.

Which goods are exempt regardless of origin

Six categories are carved out across all 60 economies. The Section 232 carve-out is among the widest and the easiest to misapply.

Section 232 goods. Articles and parts of articles that are subject to Section 232 tariffs—including covered aluminum, steel, copper, vehicle, wood-product and semiconductor articles—are excluded from the new Section 301 duties. The exemption applies to goods actually subject to the relevant Section 232 action, not automatically to every product associated with those sectors.
Pharmaceutical applications. A specified list of HTSUS subheadings is exempt where the product is used in a pharmaceutical application. Non-pharmaceutical uses of the same classifications do not qualify, making the final treatment narrower in application than a code-only exemption.
Civil aircraft. Aircraft, engines, parts, components, subassemblies and ground flight simulators meeting HTSUS General Note 6.
Informational materials. Publications, films, photographs, recordings, artworks and news wire feeds.
Humanitarian donations. Food, clothing and medicine donated to relieve human suffering.
Accompanied personal baggage.

The product-specific annexes are also broader than the draft proposal. USTR added exemptions for an additional 471 products after public comment, covering raw materials, goods critical to domestic supply chains, products that cannot be sourced domestically in sufficient quantities or at reasonable prices, and products whose exemption supports partner commitments. The expanded annexes moderate the practical effect relative to the headline rates. Anyone who modelled exposure from the June 5 draft annex should re-run it against the final version.

One exemption has a later start. Patented pharmaceutical articles covered by HTSUS headings 9903.04.60 through 9903.04.66 become exempt on July 31, 2026, a week after the general tariff effective date.

Where the rate is actually zero: USMCA and CAFTA-DR

Canada and Mexico appear in the 10% column, and that is where many summaries stop. The final action goes further: goods of Canada or Mexico entered free of duty under USMCA, including qualifying treatment under Subchapter XXIII of Chapter 98 and Subchapter XXII of Chapter 99, are exempt from the new Section 301 duty. The exemption applies whether or not the “S” or “S+” special rate indicator appears in the tariff schedule.

For a USMCA-qualifying shipment entered free of duty, the July 24 change was therefore not a move from 10% to another 10%. It was a move from the Section 122 surcharge to no new forced labor Section 301 duty. That sharpens the argument in From 45% to 86%: How USMCA Became the Only Tariff Shelter. The value of audit-ready origin documentation just went up again.

Textile and apparel goods under General Note 29(d)(v) that are products of Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras or Nicaragua and entered free of duty under CAFTA-DR are also exempt. For El Salvador and Guatemala, the CAFTA-DR textile exemption overlaps with country-specific exemptions tied to their reciprocal trade commitments. Where a good qualifies under both, the importer may elect the applicable Chapter 99 treatment.

Preference eligibility alone does not shield goods. The exemption attaches to goods actually entered free of duty under the agreement, so the claim must be made and substantiated on the entry.

Why both the load date and entry date determined July exposure

The new duty generally attaches to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. EDT on July 24. Physical arrival alone was not determinative during the transition.

The in-transit exemption turned on two conditions. The goods had to be loaded onto a vessel at the port of loading and in transit on the final mode before 12:01 a.m. EDT on July 24. They also had to be entered for consumption, or withdrawn from warehouse for consumption, before 12:01 a.m. EDT on July 28.

A container that berthed on July 22 and was entered on July 25 could therefore have qualified for the exemption, provided it met the pre-July 24 loading and final-mode requirements. A container that berthed and was entered on July 26 could also have qualified if it had been loaded and in transit on the final mode before the cutoff. Arrival after July 24 did not by itself eliminate the relief.

That transition window is now closed. Goods entered after the July 28 deadline are subject to the new origin and product treatment unless another exemption applies.

The operational lesson is worth carrying forward. Eligibility was decided per shipment by an origin load timestamp and a U.S. entry timestamp. The final action was announced only hours before the duties took effect, although qualifying in-transit goods had until July 28 to be entered. Teams that could pull both timestamps per container could test eligibility quickly. Teams reconstructing load dates from carrier portals, arrival notices and broker email threads faced a slower process and may have difficulty substantiating a claim if CBP asks.

If reconstructing load and entry dates container by container ate your week, it may be worth walking through how ops teams keep container milestone timestamps in one place before the next rate change lands.

Two mechanics from the implementing guidance are also worth flagging to your broker. Goods subject to these duties may generally be admitted into a Foreign Trade Zone only under privileged foreign status as defined in 19 C.F.R. 146.41, unless they qualify for domestic status under 19 C.F.R. 146.43. Entry-summary reporting must also follow CBP’s prescribed order for the applicable Chapter 99 and Chapter 1 through 97 classifications.

Chapter 98 entries are generally outside the new duty, with exceptions for subheadings 9802.00.40, 9802.00.50 and 9802.00.60 and heading 9802.00.80. For qualifying goods repaired, altered, processed or assembled abroad under those provisions, the additional duty applies to the value of the foreign repair, alteration, processing or assembly, as applicable under the relevant classification.

What is still ahead

Date	What happens	Who it affects
July 31, 2026	Exemption for patented pharmaceutical articles covered by HTSUS 9903.04.60 through 9903.04.66 takes effect	Pharmaceutical importers
By September 1, 2026	USTR has advised that establishing the textile and cotton TRQs should become feasible	Bangladesh, Cambodia, Indonesia and Malaysia apparel and textile importers
Pending	A separate Federal Register notice will announce the TRQ effective date and implementing terms. Until then, the standard 10% treatment applies unless another exemption covers the goods	Same four partners
No fixed date	Section 301 has no equivalent to Section 122’s automatic 150-day expiration	All 60 economies

Forward dates as of July 30, 2026. The planned TRQs have an initial three-year term and are to be based on each partner’s purchases of U.S. textile inputs or U.S. cotton.

The last row changes planning assumptions. Section 122 had a built-in death date, which is why many 2026 cost models treated the 10% as a temporary line item due to fall away in July. Section 301 has no equivalent fixed clock. USTR may modify or terminate an action, and litigation or negotiations may also change the treatment, but none provides a predictable expiration date for landed-cost planning.

Litigation is worth watching rather than counting on. The Court of International Trade held on May 7, 2026 that the administration exceeded its Section 122 authority, but appellate proceedings allowed CBP to continue collecting the surcharge through July 23. The July 24 sunset stopped collection going forward and did not itself resolve whether previously paid Section 122 duties must be refunded. That question remains tied to the litigation, following the same distinction between ending collection and recovering past payments covered in IEEPA Tariff Refunds: Where the $166 Billion Refund Process Actually Stands.

USTR also has a separate Section 301 investigation open into structural excess capacity and production across 16 major trading partners. Any duties resulting from that action could add another product- and origin-specific layer to the tariff stack.

What to re-check this week

Confirm which of the four rate treatments applies to every origin you source from, and stop using a single blended tariff assumption.
Map the final exemption annexes against the HTSUS classifications in your active import book rather than relying on the June proposal.
For the EU, Taiwan, Japan, South Korea and Switzerland, calculate the additional duty from the product’s MFN rate instead of applying a flat 10% or 12.5%.
Verify whether Canadian and Mexican goods are actually being entered free of duty under USMCA. Eligibility that is not claimed and supported does not produce the exemption.
For Chinese goods, model the new 12.5% alongside existing Section 301, Section 232, antidumping, countervailing and other applicable duties.
Confirm with your broker that the correct Chapter 99 headings, sequencing and Foreign Trade Zone status are being used.
Separate shipments that qualified for the closed July 24–28 in-transit window from later entries, and retain the load and entry records supporting any exemption claimed.
Watch for the separate notice implementing the Bangladesh, Cambodia, Indonesia and Malaysia textile and cotton TRQs rather than assuming a September 1 effective date.

The headline change is easy to compress into “10% ended and another tariff replaced it.” The operational version is less tidy. Origin, MFN rate, product classification, trade-agreement treatment and entry timing now determine whether the new layer is zero, a partial top-up, 10% or 12.5%—before any pre-existing duties are added.

Leave a ReplyCancel reply

New Report: The Future of SCM, and Why Visibility Alone Is No Longer Enough

[TRADLINX Report] 2026 Shipping Market Outlook: Falling Rates, Rising Risks