Key Takeaways:
The Trump administration proposed tariffs of as much as 12.5 percent on 60 U.S. trading partners, its most aggressive effort yet to rebuild a tariff wall after the Supreme Court struck down the president's emergency duties in February.
"The failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable," Jamieson Greer, the U.S. Trade Representative, said in a statement. "This creates a dynamic where American workers are forced to compete globally on an unlevel playing field."
The Office of the U.S. Trade Representative on Tuesday proposed a 12.5 percent duty on imports from countries including China, Japan, India, Brazil, South Korea, Switzerland and the United Kingdom, citing investigations that found those nations failed to enact or effectively enforce laws prohibiting goods made with forced labor. Goods from the European Union, Canada and Mexico would face 10 percent import taxes. The tariffs, which follow a public comment period and a hearing scheduled for early July, are expected to take effect once the administration's temporary 10 percent tariffs expire in late July.
The move marks the administration's third attempt to impose broad import duties after the Supreme Court in February ruled that President Trump exceeded his authority by using the International Emergency Economic Powers Act of 1977 to impose sweeping tariffs without congressional approval. The court's decision brought the average U.S. tariff rate down to 8.2 percent from 14.9 percent, according to the Tax Foundation. Trump then imposed temporary 10 percent tariffs under Section 122 of the Trade Act of 1974, a never-before-used provision that a trade court ruled illegal in May. Those tariffs pushed the average rate back to 11.7 percent. The latest Section 301 duties, if implemented, would add to that figure.
A Legal Path With Its Own Risks
Section 301 of the 1974 Trade Act allows a president to impose permanent duties if the administration can point to unfair trade practices that burden U.S. commerce. Trump used the same provision during his first term to levy tariffs on China over intellectual property theft, and the Biden administration kept most of those duties in place. The provision is considered more legally durable than IEEPA because Congress explicitly delegated tariff authority to the president under the statute.
But the latest use of Section 301 could face legal challenges. Alan Wolff, an attorney and former deputy director-general of the World Trade Organization, argued that the statute was written to address the practices of "a foreign country" using the singular, not multiple nations at once. Courts are also likely to view this as "mainly an attempt once again to transfer the full tariff power from the Congress to the president," in violation of the Constitution, Wolff wrote in a post for the Peterson Institute for International Economics.
Some U.S. trading partners pushed back immediately. The European Union called the levies unjustified. China said it does not have forced labor and opposes using tariffs "as a pretext for political manipulation."
The Cost to Consumers and Companies
Economists say the tariffs have already pushed up consumer prices and made U.S. manufacturing more expensive. The Tax Foundation estimated that Trump's 2025 tariffs amounted to an average tax increase of $1,000 per U.S. household, with duties imposed this year adding another $700. A Harvard University price tracker shows carpets, coffee and building materials all getting more expensive.
Companies from Levi Strauss to spice seller McCormick have said they would pass tariff costs on to consumers after largely absorbing them last year. Some firms have received tariff refunds following the Supreme Court's decision and are using the money to invest in operations or pass savings to customers.
The administration is also pursuing a second set of tariffs from a separate Section 301 investigation into what it describes as "excess manufacturing capacity" among 16 of America's largest trading partners. Those duties are expected later this summer. The last time Trump escalated tariffs on China in 2019, bilateral trade between the two countries fell by roughly 15 percent over the following year, according to Census Bureau data.
This article is for informational purposes only and does not constitute investment advice.
