USTR Forced Labor Tariffs Use a Column 1 Floor for Five Partners
USTR's final forced labor action uses a net-of-MFN Column 1 floor for the EU, Taiwan, Japan, South Korea, and Switzerland. The new Section 301 duty fills the gap to 10% or 12.5%, while specific and compound rates make customs value part of the entry calculation.
Primary lensTariff authority
Sub-topicForced-labor action
Evidence base10 records used
Use caseAuthority exposure review
USTR's final forced labor tariffs create two rate systems for goods entered for consumption, or withdrawn from warehouse for consumption, on or after July 24.
Most of the 60 covered economies receive an additional 10 or 12.5 percent Section 301 duty. Goods of the European Union, Taiwan, Japan, South Korea, and Switzerland follow a different rule. Their new duty fills the gap between the applicable Column 1 rate and a 10 or 12.5 percent threshold. When the Column 1 rate already reaches that threshold, the new Section 301 duty is zero.
The headline rate alone cannot resolve an entry. Origin identifies the country rule. Classification, the applicable Column 1 rate, and, for specific or compound duties, customs value determine the Chapter 99 heading and the amount collected.
The final notice splits the 60 economies into two rate systems
USTR's July 23, 2026 final-action notice applies to goods entered for consumption, or withdrawn from warehouse for consumption, at or after 12:01 a.m. Eastern time on July 24, 2026. USTR issued the 431-page text as a Federal Register prepublication notice. The published version should be checked when the Federal Register posts it. The notice implements new headings 9903.05.20 through 9903.05.84 and a set of exemption headings in the same subchapter.
For 55 economies, the country heading adds either 10 or 12.5 percent to the applicable tariff schedule rate. A covered article of India, for example, uses the ordinary rate in its Chapters 1 through 97 classification and adds 10 percent under the new country heading, unless an exemption applies. A covered article of China adds 12.5 percent on the same basis.
Five partners instead receive what USTR calls a rate "net of MFN." The European Union and Taiwan use a 10 percent threshold. Japan, South Korea, and Switzerland use 12.5 percent. The operative instruction is product-specific. If the applicable Column 1 rate is below the threshold, this Section 301 duty fills the difference. If that rate equals or exceeds the threshold, this Section 301 duty is zero.
The clean rate expression is:
Forced labor Section 301 additional ad valorem rate = the greater of zero or (partner threshold rate minus applicable Column 1 ad valorem or ad valorem-equivalent rate).
Duty dollars are then calculated from that additional ad valorem rate and customs value.
For these five partners, the ordinary Column 1 rate and the new Section 301 duty together equal the higher of the applicable rate or the partner threshold. Other duties and charges remain separate.
USTR tied this treatment to Agreements on Reciprocal Trade or similar arrangements. That policy reason matters to the country list, but it does not calculate an entry. The broker still needs the tariff classification and the applicable rate for the product.
Five partners use a product-level Column 1 floor
Under the product-specific instruction in USTR's final-action notice, consider an EU article with a 6.5 percent Column 1-General rate. If it is covered and not exempt, the forced labor Section 301 component is 3.5 percentage points, bringing the two-rate total to 10 percent. An EU article at 12 percent receives a zero Section 301 component because its ordinary rate already exceeds the 10 percent threshold. Its 12 percent ordinary rate remains.
The same method applies to Taiwan at 10 percent, and to Japan, South Korea, and Switzerland at 12.5 percent. A Japanese article with a 4 percent applicable rate receives an 8.5 percent Section 301 component. A Swiss article with a 15 percent rate receives zero under this action.
The threshold raises lower applicable rates while leaving higher rates unchanged. Treating it as a flat surcharge overstates duty. Treating it as a cap understates duty on products already above the threshold.
The Chapter 99 architecture makes the rate test part of heading selection. EU goods use 9903.05.38 when the ad valorem or ad valorem-equivalent Column 1 rate is at least 10 percent and 9903.05.39 when it is below 10 percent. Japan uses 9903.05.48 and 9903.05.49 at or above and below 12.5 percent, respectively. South Korea uses 9903.05.70 and 9903.05.71, Switzerland uses 9903.05.73 and 9903.05.74, and Taiwan uses 9903.05.75 and 9903.05.76.
A country-level rate table cannot choose between those paired headings. The entry line needs the product rate test first. That is the part of the final action that broad summaries of "10 to 12.5 percent tariffs" leave unresolved.
A zero Section 301 rate leaves the rest of the stack intact
A zero amount under a paired heading only means the applicable Column 1 rate already reaches the threshold. The ordinary duty remains, and other remedies may still apply.
U.S. note 52(a) in the final-action notice states that covered products remain subject to other additional duties in subchapter III or IV of Chapter 99. It also preserves antidumping and countervailing duties, taxes, fees, exactions, and charges. The final calculation may therefore include another Section 301 action, safeguard duties, or AD/CVD cash deposits when the governing scope rules attach them. The action separately exempts the Section 232 product categories enumerated in U.S. note 52(f) and heading 9903.05.90; the applicable Chapter 99 heading must be confirmed.
Only the applicable Column 1 rate offsets the threshold. Other additional duties stay outside the top-up calculation.
This boundary is especially important for teams that previously modeled an EU trade arrangement as a single all-in ceiling. Traverse Analysis, The EU Approved Its Half of Turnberry, and the U.S. 15 Percent Ceiling Has Already Fragmented showed why separate statutory layers must be tested on their own terms. The July 23 notice now supplies an express net-of-MFN formula for one layer, but it does not merge the rest of the stack into that formula.
The entry worksheet should show the calculation as separate rows: applicable Column 1 duty, forced labor Section 301 top-up, other Chapter 99 duties, AD/CVD, and fees. Recording only an "effective rate" makes it hard to prove which amount came from which authority.
Specific duties turn customs value into a rate input
The paired headings require an ad valorem rate comparison. Many tariff lines already state a percentage, so the comparison is direct. A specific rate, such as cents per kilogram, or a compound rate that combines a percentage and a unit charge, needs conversion.
U.S. note 52(k) in the final-action notice gives the method for goods of the five partners subject to a specific or compound Column 1-General duty. Divide the amount of duty payable under Column 1-General by the customs value of the good. The notice illustrates a 50-cent-per-kilogram duty on one kilogram entered at $10. The ad valorem equivalent is 5 percent.
That conversion can make customs value decide the paired heading. Suppose an EU product has a specific duty of $1 per unit. At a customs value of $8 per unit, the ad valorem equivalent is 12.5 percent, so the product is already above the EU threshold and this Section 301 component is zero. At a customs value of $20, the equivalent is 5 percent, so the Section 301 component fills five percentage points.
The classification and specific duty did not change. The entered value changed the equivalent rate and the Chapter 99 route. Quantity, customs value, and the applicable duty amount must therefore be calculated on the same line and at the same valuation basis.
Importers should use the CBP-accepted customs value reported for the entry, not an unsupported commercial price, and retain the valuation record supporting that figure. A worksheet that converts a specific duty using the wrong value can select the wrong heading even if the HTS classification is correct.
Compound duties need both elements preserved. The notice directs an ad valorem equivalent calculation, so the duty payable used in the numerator should reflect the applicable compound rate before comparison with the threshold. The notice prescribes no rounding convention. The resulting percentage, source values, documented rounding method, and selected 9903 heading belong in the entry file pending CBP guidance.
South Korean preference claims need their own record
The general rule in U.S. note 52 says eligibility for special tariff treatment under general note 3(c)(i) does not by itself remove the new additional duty. A free trade agreement claim and this Section 301 test are separate decisions.
South Korea is the only one of the five partners for which note 52(k) expressly addresses a properly claimed specific or compound Column 1-Special rate. The notice directs the same conversion method: divide the duty payable under the properly claimed special rate by customs value to find the ad valorem equivalent.
That instruction prevents a team from defaulting to the Column 1-General specific rate after it has properly claimed a Korean special rate. It also prevents the opposite shortcut, treating KORUS qualification as a blanket exemption. The article must qualify for the preference, the claim must be made properly, and the selected rate must then feed the Section 301 threshold test.
The calculation file should identify which Column 1 rate was used and why. For a Korean entry, that means retaining the origin support for the preference, the rate shown in the tariff schedule, the specific or compound duty calculation when applicable, the customs value, the equivalent percentage, and the chosen Chapter 99 heading. A vendor statement that the good is "KORUS eligible" does not establish all of those points.
Exemptions are resolved before the Column 1 floor
The Column 1 floor applies only to a covered product that is not otherwise exempted. USTR's July 23, 2026 forced labor Section 301 fact sheet highlights broad product exclusions, including covered Section 232 goods, and the notice adds country-specific lists for several partners. The complete legal scope sits in Annex I, Annex II, and U.S. note 52.
One exemption change has a later date. Patented pharmaceutical articles provided for in headings 9903.04.60 through 9903.04.66 join heading 9903.05.90 and note 52(f) only for entries on or after 12:01 a.m. Eastern time on July 31, 2026.
That sequence matters. First determine origin and classification. Then test the general and country-specific exemptions. Only after the article remains covered should the paired-heading rate comparison be performed.
Chapter 98 treatment under U.S. note 52(a) supplies another boundary. The exclusion applies when Chapter 98 treatment is properly claimed under CBP regulations and CBP agrees the entry is appropriate. For 9802.00.40, 9802.00.50, and 9802.00.60, the additional duty applies to the value of repairs, alterations, or processing. For 9802.00.80, it applies to the value of the article assembled abroad less the cost or value of qualifying U.S. products.
An exemption analysis and a zero-rate analysis should not share the same status code in an internal system. One says the article is outside the added-duty scope. The other says the article remains in the five-partner rate architecture but produces no added duty at its current applicable rate.
The July 24 entry packet needs a reproducible calculation
The short implementation window leaves little room for country-level defaults. A usable entry packet for the five partners should contain six items: origin support, the eight-digit classification, exemption result, applicable Column 1 rate, any ad valorem equivalent calculation, and the selected Chapter 99 heading.
The final-action notice provides a narrow transit exception. Goods must have been loaded on a vessel at the port of loading and already in transit on the final mode before 12:01 a.m. Eastern time on July 24. They must also be entered for consumption, or withdrawn from warehouse for consumption, before 12:01 a.m. Eastern time on July 28. The exception does not replace the rate worksheet for later entries.
For recurring lines, the worksheet should preserve the order of operations. Test exemptions before rates. Convert any specific or compound rate using customs value, apply the partner threshold with a floor of zero, and record other duty layers separately.
Country alone cannot resolve the five-partner calculation. A line-level record must show the ordinary rate, the selected Chapter 99 heading, and each additional duty layer.
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