The Trump administration has imposed double-digit tariffs on virtually all imports, citing forced labor concerns under Section 301 of the Trade Act of 1974. These tariffs are already in effect, as of 12:01 a.m. today.
- According to Supply Chain Dive, goods that were already loaded on a vessel and will be entered for consumption before July 28 will not be affected by the new levies.
The new tranche of tariffs, while not unexpected, was announced just hours before implementation, despite calls from the business community – including PPAI – to provide ample time for adjustment.
Tariffs have been an ongoing challenge for the branded merchandise industry, from stifling uncertainty caused by changing rates and policies to squeezed margins and supply chain disruptions.
“For the branded merchandise industry, yesterday’s announcement is another reminder that global supply chains continue to evolve,” says Alok Bhat, market economist and PPAI’s research and public affairs lead. “Businesses should stay informed, maintain open communication with suppliers and customers/end buyers and remain flexible as trade policies develop.”
Join Us To Support The Industry In Washington: Register Your Interest In Attending LEAD 2027
One Tariff After Another
The new duties replace the administration’s 10% blanket tariffs under Section 122, which expired at midnight. The 10% levies were put in place in February after the Supreme Court struck down the president’s wide-ranging global tariffs enacted last year under the International Emergency Economic Powers Act.
“Our latest PPAI 100 supplier research shows that tariffs continue to rank among the industry’s top concerns, and nearly two-thirds of suppliers reported reassessing their sourcing strategies in response to the changing trade environment,” says Bhat.
RELATED: PPAI Research: The Tariff Effects, From Refunds To End Buyers And Operations
In June, the Office of the U.S. Trade Representative announced the results of its forced labor investigation finding that 59 nations and the European Union have failed “to impose and effectively enforce a prohibition on the importation of goods produced with forced labor” and that these practices “burdens or restricts U.S. commerce, and are thus actionable under Section 301(b) of the Trade Act.”
- Results have not yet been released for a separate Section 301 investigation into potential overproduction by 16 economies.
The following countries’ imports are now subject to the 10% rate: Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago and the United Kingdom. It’s unclear as yet whether this tariff will stack onto the proposed 50% tariff on Canadian goods set to apply in August.
- Of this group, cotton and textile imports from Bangladesh, Cambodia, Indonesia and Malaysia are subject to the 10% rate until tariff rate quotas are established (by September 1). The quotas are meant to encourage these nations to import U.S. cotton “to reduce reliance on inputs from other sources that are more likely to contain forced labor inputs,” according to a White House statement.
Some products from certain economies are subject to a Most Favored Nation rate, meaning the total tariff under MFN and Section 301 combined will be no higher than the new Section 301 rate:
- European Union and Taiwan = 10%
- Japan, Korea and Switzerland = 12.5%
All other investigated nations, including China, are now subject to the 12.5% tariff. USTR estimates that these new tariffs apply to 99% of imports.
A USTR fact sheet lists exemptions that include raw materials not readily available domestically, products subject to Section 232 duties and certain goods that qualify under the United States-Mexico-Canada Agreement. (The full list of exempted products can be found in the Federal Register Notice.)
USMCA Negotiations Continue
Meanwhile, U.S. Trade Representative Jamieson Greer met again this week with Mexican officials for bilateral negotiation of the United States-Mexico-Canada Agreement, which the administration declined to renew earlier this month. The president has balked at allowing USMCA-compliant products from Canada and Mexico to bypass his global tariffs and is looking to retool the deal.
ICYMI: US Declines To Renew USMCA
U.S.-Canada trade relations remain frosty, cooled further by Trump’s announcement of forthcoming 50% tariffs on Canadian imports with no exemption for USMCA-compliant goods. Ultimately, if the U.S., Canada and Mexico don’t agree to extend the USMCA, it will terminate in 2036.
Don’t Miss A Thing: SUBSCRIBE To PPAI Newslink
PPAI will continue to monitor these developments and provide updates. Subscribe to PPAI Newslink to have them delivered straight to your inbox twice a week.
