Section 301 of the US Trade Act of 1974 aims to mitigate unfair trade practices by partners that negatively impact US commerce. Tariffs imposed under this provision are anticipated to reflect the specific violation and apply consistently across nations.
However, according to GTRI, the US Trade Representative’s (USTR) determinations concerning forced labor, issued on July 23, 2026, suggest that the Trump administration is leveraging Section 301 to maintain the commercial benefits of recent trade agreements while pursuing broader trade policy goals.
The think tank indicated that countries sharing the same Section 301 forced labor determination are now receiving different tariff treatments based on whether they have signed a trade agreement with the United States in the last two years. GTRI contended that this shift from traditional Section 301 application is likely to prompt legal challenges.
This policy change follows a US Supreme Court ruling on February 20, 2026, which invalidated the reciprocal tariff system and eliminated the legal foundation for tariff concessions that Washington had guaranteed under trade agreements with the European Union, Japan, South Korea, Taiwan, and Switzerland during 2025-26.
Under these agreements, the US had offered partner nations a maximum tariff ceiling of 15%. Products with US Most Favoured Nation (MFN) tariffs below 15% were required to pay only a sufficient reciprocal tariff to bring the total duty to 15%. Products with MFN tariffs of 15% or higher continued to pay only the MFN rate. This “top-up” mechanism represented the primary commercial advantage of the agreements, rather than uniform tariff reductions.
GTRI stated that the new Section 301 forced labor tariffs effectively restore much of that advantage under a different legal framework. The July 23 determination sets a combined MFN plus Section 301 tariff ceiling of 10% for the European Union and Taiwan, while Japan, South Korea, and Switzerland face a 12.5% ceiling.
Consequently, products with MFN tariffs below these ceilings pay only the additional Section 301 duty necessary to reach the ceiling, while items already attracting tariffs at or above this ceiling face no further Section 301 charge.
GTRI Founder Ajay Srivastava pointed out that while the USTR determined that the European Union, Japan, South Korea, Taiwan, and Switzerland did not adequately address forced labor issues, these economies were still granted preferential tariff treatments.
The inconsistency is especially prominent in the treatment of India and the European Union. Though both received a 10% Section 301 forced labor determination, the majority of Indian exports are subject to the applicable US MFN tariff plus the full 10% Section 301 duty. In contrast, EU exports incur only enough Section 301 duty to total a 10% tariff.
For example, a product subject to a 6% MFN tariff would incur a total duty of 16% if imported from India, compared to just 10% from the European Union. The same principle applies to Japan, South Korea, and Switzerland, where the combined tariff is limited to 12.5%. In contrast, nations without similar trade agreements generally face the MFN tariff plus the full Section 301 duty.
GTRI noted that the varying tariff treatments for countries with the same Section 301 legal finding indicate that the levy is increasingly determined by the existence of a recent trade agreement with the United States instead of the actual violation.
While the think tank believes this policy is susceptible to legal challenges due to its deviation from the traditional Section 301 purpose, it also argued that the commercial benefits for partner countries seem limited.
Srivastava highlighted that the US trade-weighted average MFN tariff stands at approximately 2.2%, indicating that the preferential tariff treatment offers relatively modest additional market access in return for significant and long-term concessions on tariffs, regulations, and domestic policies made by partner nations.
