Forced Labor Tariffs Begin July 24: What the 10% and 12.5% Tariff Changes Mean for Your Cargo

Executive Summary 

The U.S. started collecting Section 301 forced labor tariffs at 12:01 a.m. Eastern on July 24. Sixty economies are covered, which works out to about 99.4% of what the country imports. Seventeen countries pay 10%, and 38 pay 12.5%, while five have their rate capped once regular duty counts. Freight already at sea avoids the charge only if it’s entered by 12:01 a.m. on July 28. These tariff changes carry no expiration date.

Intro

At 12:01 a.m. Friday, July 24, the U.S. started charging a new import tariff on goods from 60 trading partners. It’s 10% for some countries and 12.5% for others, and it reaches about 99% of everything this country buys from abroad. 

If you import, you’re in it.

The reason given is forced labor. USTR spent five months investigating whether those governments enforce bans on goods made with forced labor, decided they don’t, and is taxing their exports until that changes. The findings came out in June, and the final action landed Thursday afternoon, July 23, live by midnight.

Freight already on the water gets a short reprieve. You have to enter it by 12:01 a.m. Tuesday, July 28, and after that everything pays.

What deserves more attention is what these tariff changes replaced. All year you’ve been paying duty you had a decent shot at recovering, since the Supreme Court struck the IEEPA tariffs in February and CBP’s been refunding them through CAPE. The 10% that filled the gap had an expiration date on it.

This one, however, doesn’t, and no refund is coming. The rest of this covers what you owe, what’s exempt, and what has to happen before Tuesday. We’ve tracked every step on the Mallory Alexander blog.

What Makes These Tariff Changes Different?

The law behind it is Section 301, same as the China tariffs, and that’s the part to watch. It’s already been to court and held up. On June 15, the Supreme Court refused to hear the List 3 and 4A case, ending six years of fighting and leaving those duties right where they were.

The last two didn’t go that way. IEEPA got thrown out. Section 122 had a hard 150-day stop built into it and ran out on schedule Friday morning, which we wrote about when the Federal Circuit paused the ruling against it.

USTR did the homework this time too. Sixty investigations over five months, two rounds of hearings and more than 2,100 comments on the record. That’s hard to pull apart later.

What Will It Cost You?

Bring in $2 million of knitwear from Bangladesh, and you’re out another $200,000 a year. Where the goods were made decides everything, and there are three tiers.

• Flat 10% Rate: Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the U.K. These all either ban forced labor imports, promised to in a trade deal, or have something partway there.
• Flat 12.5% Rate: Thirty-eight countries, China and Vietnam included, pay the higher one. No ban, no promise, no break.
• Capped Net-of-MFN Rate: The EU and Taiwan top out at 10% total, Japan, Korea, and Switzerland at 12.5%. If your regular duty already hits that number, you owe nothing extra. The notice spells it out.

The same part now costs two different amounts depending on which plant made it. Our trade management team works those numbers, same as we did for Brazil this week.

The Containers Already on the Water

Cargo that was already moving gets a pass, but you have to hit both marks. It had to be loaded at the port and on its final leg before 12:01 a.m. July 24. You also have to file the entry, or pull it from the warehouse, before 12:01 a.m. July 28.

That second one catches people. It’s about when you file, not when the ship docks. A box that lands Monday, July 27, and sits waiting on an invoice pays full freight anyway. CBP files the good ones under 9903.05.85.

So pull your load dates today. Our ocean and brokerage teams are going through client cargo container by container, sorting what clears from what doesn’t. If something valuable won’t make it, air can come in under the duty.

What You Might Not Have to Pay

Plenty of freight escapes this, and the list is broad enough to be worth an hour of somebody’s Monday.

• Section 232 Goods: Steel, aluminum, copper, cars, wood, and semiconductors already pay their own duty, so they’re out. Nothing stacks.
• USMCA Goods: Anything from Canada or Mexico coming in duty-free under USMCA is fully exempt, and that’s the biggest break here. It only holds if the paperwork proves origin, so read CBP’s rules before your cross-border lanes lean on it.
• CAFTA-DR Textiles and Apparel: Qualifying goods from Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua are out, which is real relief for apparel and ag shippers.
• Country-Specific Carve-Outs: U.K. whisky went to zero. Deals like Jordan’s came with their own exclusions.

Run your codes against CBP’s list instead of guessing. A few chemical exemptions got cut back to pharmaceutical use only.

Where Could This Go Wrong on the Entry?

None of it helps if the entry’s wrong, and there are 60+ new Chapter 99 headings to keep straight. They run 9903.05.20 through 9903.05.84 by country, with general exemptions at 9903.05.85 through .92.

Order counts on the line. Chapter 98 first, then Chapter 99, with Section 301 ahead of 122, 232, and 201. Most Chapter 98 claims are fine, though 9802 repair and assembly entries still owe on the foreign work.

If you run a zone, look at this one first. Covered goods can only come in as privileged foreign now, so the rate locks at the door. Check your warehousing plan against that, plus the bond rules in the new IOR order.

CBP’s enforcement guidance covers the admissibility side. And USTR still has an excess capacity case running against 16 countries, so these won’t be the last tariff changes this year.

Where Mallory Alexander Comes In

Before July 28, somebody’s going to ask you what this costs. The answer comes down to four things: whether your origin claims hold up, whether your products are on an annex, whether your water freight clears on time, and whether the codes go on the line in the right order.

At Mallory Alexander, we’ve been on this all week. All year for that matter. Running client entry data against the annexes, checking USMCA and CAFTA-DR qualification, filing early on anything that can still make it, rebuilding cost numbers country by country. That’s what we’re built for.

If you’re buying from six countries at once, managed logistics gets one team on all of it instead of six separate conversations; myMALLORY keeps status and documents in one place, so nobody’s hunting a bill of lading at 6 a.m.

Retail and manufacturing importers have the most on the line here. Those are lanes we’ve run out of Memphis for a hundred years, and what our bread and butter is. 

Send us your top HTS codes and where they’re made. We’ll come back with what’s dutiable, what’s exempt, and what still has time to clear. Contact us to learn more.