US Section 301 Tariffs May Face Challenges Over Unequal Treatment

Section 301 of the US Trade Act of 1974 was created to address specific unfair trade practices of trade partners that harm US commerce. Tariffs imposed under Section 301 are expected to reflect the violation and be applied consistently across countries. 

However, the US Trade Representative's forced-labour determinations issued on July 23, 2026 suggest that the Trump administration is using Section 301 to preserve recent trade agreements and advance broader trade policy goals.

Countries receiving the same Section 301 determination now face different tariff treatment depending on whether they signed a trade agreement with the United States in the past two years. That departure from the traditional use of Section 301 is likely to face legal challenges.

The shift follows the US Supreme Court's February 20, 2026 decision striking down the reciprocal tariff regime. That ruling eliminated the legal basis for tariff concessions Washington had promised under trade agreements with the European Union, Japan, South Korea, Taiwan and Switzerland in 2025-26, sharply reducing the value of those agreements. The new Section 301 forced-labour tariffs appear to restore many of those benefits under a different legal authority.

Under those trade agreements, the United States offered these partners a 15% maximum tariff ceiling. Products with US MFN tariffs below 15% paid only enough reciprocal tariff to bring the total tariff to 15%, while products already subject to MFN tariffs of 15% or more paid only the MFN duty. This "top-up" formula—not across-the-board tariff cuts—was the main commercial benefit of the agreements.

The July 23, 2026 Section 301 determinations largely preserve the same approach. Although the USTR found the European Union, Japan, South Korea, Taiwan and Switzerland to have failed to adequately address forced labour, it still granted them preferential treatment.

The EU and Taiwan now face a combined MFN plus Section 301 tariff ceiling of 10%, while Japan, South Korea and Switzerland face a 12.5% ceiling. Products with MFN tariffs below those levels pay only enough Section 301 duty to reach the ceiling, while products already at or above the ceiling pay no additional Section 301 duty.

The difference is clear when compared with countries that do not have recent US trade agreements. India and the European Union both received a 10% Section 301 forced-labour determination. Yet most Indian exports pay the normal US MFN tariff plus the full 10% Section 301 duty, while EU exports pay only enough Section 301 duty to bring the total tariff to 10%. For example, a product with a 6% MFN tariff pays 16% if imported from India, but only 10% if imported from the European Union. The same principle applies to Japan, South Korea and Switzerland, whose total tariff is capped at 12.5%, while countries without comparable trade agreements generally pay MFN plus the full Section 301 tariff.

This creates a basic inconsistency. If countries receive the same Section 301 finding, they would normally be expected to face the same remedy. Instead, the tariff depends largely on whether they recently signed a trade agreement with the United States. The legal finding remains the same, but the tariff changes to preserve earlier trade bargains—a departure from the traditional purpose of Section 301 that is likely to be challenged.

Even if the approach is open to legal scrutiny, its commercial value for partner countries appears modest. The US trade-weighted average MFN tariff is only about 2.2%, so the preferential tariff treatment provides limited additional market access. In return, however, partner countries have made broad and lasting concessions on tariffs, regulations and domestic policies, raising questions about whether the benefits justify the commitments.