United States Economy Faces New 10-12.5% Tariffs on Imports From 60 Countries
The United States economy faces new tariffs of 10 to 12.5 percent on imports from 60 countries accounting for 99 percent of US imports, citing inadequate enforcement of bans on goods produced by forced labor, just as temporary 10 percent worldwide tariffs expired.
New Tariffs Imposed on 60 Trading Partners
The new tariffs take effect at 12:01 a.m. Friday in Washington as the stopgap 10 percent levies imposed under Section 122 of the Trade Act of 1974 expire. [1] The duties are imposed under Section 301 of the Trade Act of 1974 following an investigation into trading partners' failure to prevent forced-labor goods in supply chains. [1] Seventeen economies including Canada, Mexico, the UK and India face a 10 percent tariff; the EU and Taiwan at least 10 percent; Japan, Switzerland and South Korea at least 12.5 percent; and 38 others 12.5 percent. [3] US Trade Representative Jamieson Greer stated the action corrects a human rights abuse and distortive trade practice, noting the US has enforced a forced labor import ban for nearly a century. [1] “The United States has had a forced labor import ban for nearly a century, and rigorously enforces it; it’s well past time for our trading partners to do the same,” Greer said in a statement. [1] The new duties take effect Friday at 12:01 a.m. New York time. [3] Products from dozens of others will face a 12.5 percent charge. [3]
Context of Supreme Court Ruling and Temporary Levies
The move is the broadest effort yet to rebuild Trump's tariff framework after the Supreme Court struck down earlier reciprocal tariffs imposed under the International Emergency Economic Powers Act. [1] Trump had turned to the temporary levies after the Supreme Court struck down his biggest and boldest tariffs in February. [1] In response, Trump announced 10 percent worldwide tariffs under Section 122 of the Trade Act of 1974. [1] But he can only use Section 122 levies for 150 days, and the time runs out on Friday. [1] The timing of the new charges ensure there will be no gap between the two. [3] One senior administration official rejected the idea that Trump was imposing the new tariffs purely as a replacement to the earlier duties that were struck down, but also said the president would use all the tools at his disposal and won’t allow his trade policy to be undermined by a court decision. [3]
Exemptions and Adjustments to Original Proposal
Exemptions apply to fuel, foods, fertilizers, goods covered by the North American trade agreement, and certain products already subject to industry-specific levies. [3] Imports such as fuel, foods and fertilizers will be exempt from the new tariffs, as well as products such as automobiles, metals and drugs that are covered by separate, industry-specific levies. [3] Items covered by the North American trade agreement with Mexico and Canada will also be excluded. [3] There will be some changes from the original proposal, according to a senior administration official who briefed reporters before the announcement was made. [3] That includes India securing a 10 percent levy instead of the original, threatened 12.5 percent level. [3] The plan will include global and country-specific exemptions based on commitments from existing deals Trump struck with foreign governments, according to the official. [3]
Broader Trade Policy and Future Actions
More Section 301 tariffs are likely coming: Greer’s office has launched a probe into whether 16 countries — accounting for 70 percent of US imports — have overproduced goods, pushing down prices and putting US companies at a disadvantage in global markets. [1] The administration has yet to complete that investigation. [1] The White House’s decision comes on the heels of a July 15 announcement that the U.S., also invoking Section 301, will begin charging importers a 25 percent tariff on imports of certain goods from Brazil following an investigation alleging that the country engaged in unfair trade practices. [3] This week, Trump proposed tariffs on Canadian goods under a never-before-used trade authority — Section 338 — though those would only affect about 5 percent of U.S. imports from its northern neighbor and would take effect Aug. 19 depending on how negotiations go. [3] Greer is spearheading Trump’s redesigned trade policy, targeting unfair practices abroad using more legally tested statutes that require months of procedures and public engagement. [3]
Reactions and Potential Challenges
Several partners rejected the accusation. [4] The European Union dismissed it explicitly even before the final determination. [4] Countries from India and to Norway have pushed back against the allegations. [3] In Canada, a bill introduced in June is designed to strengthen government’s “ability to identify, intercept and prohibit goods linked to forced labour at the border, while providing certainty and transparency for businesses operating in or trading with Canada,” according to a public filing in the case. [3] Still, that may not stop some importers from challenging the new duties in court. [3] Several companies are expected to challenge the new round in court. [4] Saddling American importers with costs carries risks politically for Trump and his fellow Republicans, less than four months from midterm elections where the focus for Democrats is the elevated cost of living. [3]
Market Reaction
US stocks tumble as AI spending and oil prices weigh on market. [2] The S&P 500 Index is on track for its worst day in a month. [2]
What to watch next: The administration has yet to complete its investigation into excess manufacturing capacity, and Greer said recently that the excess capacity probe is taking longer than the investigation into forced labor. [3]
