US trade representative releases Section 301 report on forced labour

Section 301 report published 

On 2 June, the United States Trade Representative published its determination that the acts, policies, and practices of 60 economies related to the failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labour is unreasonable and burdens or restricts U.S. commerce. 

As a result of these determinations, the US Trade Representative has proposed recommendations as follows:

• For certain countries (16 of the 60 investigated, including the EU and the UK) which have been found to enforce or have committed to enforcing some form of forced labour measures, the proposed 301 duty rate is 10% in addition to the MFN rate of goods.  
• For the other 44 countries, the proposed 301 duty rate is 12.5% in addition to the MFN rate of goods.  

Importantly, Annex A of the report contains a large number of products that are excluded from the scope of the 301 duties, including, but not limited to:

• all products and their parts which are subject to section 232 tariffs, including the recent section 232 investigation on pharmaceuticals,
• other pharmaceutical and industrial products as specified,
• articles of civil aircraft, their engines, parts and components,
• USMCA compliant goods of Canada or Mexico 

The imposition of a 10% additional tariff will retain the current status quo and is in line with the 10% rate imposed under the Section 122 tariffs.

From an EU perspective, it is yet to be determined or clarified how this tariff would interact with the agreements made between the EU and US in the Turnberry deal, as this deal was formed on the basis of the IEEPA tariffs, which were struck down in February of this year. 

US Trade Representative Jamieson Greer stated that the proposed new US tariffs are compatible with the trade deal struck last summer, advising;

“The Turnberry agreement says that the European Union agrees and acknowledges that the United States can impose tariffs up to a certain level... We understand that a deal is a deal. We want to make sure that we’re able to resolve the trading practices that are identified as problematic in our investigations and we are going to take into account the Turnberry deal, of course, because we believe that the Turnberry deal addresses a lot of these issues,”

In response, EU Trade Commissioner Maroš Šefčovič said he had been “very surprised” by the findings of the U.S. probe and stressed that “when it comes to the labour standards, the European Union clearly has, if not the highest, definitely one of the highest in the world.”

With the expiration of the current Section 122 tariffs on 24 July 2026, it is expected that the Section 301 tariffs will be ready for implementation by this date. As such, the report confirms that impacted companies have up to 6th July to comment with a public hearing to be held on 7th July before the finalisation of implementation steps.

EU/US agreement ratified

On Tuesday 19 May, European negotiators agreed to implement the trade agreement concluded between the EU and US in the summer of 2025. The agreed final texts will now be put forward for formal adoption by the European Parliament and the Council over the coming weeks, to ensure their rapid entry into force.

An important step for the EU, and one which comes on the back of President Trump threatening to impose 25% tariffs on EU cars should the trade deal not be ratified, will see a reduction in tariffs to 0% for almost all industrial goods of US origin imported into the EU. 

A key inclusion in the final text allows the Commission to suspend the trade agreement should the US fail to drop tariffs on EU origin steel and aluminium to the 15% ceiling applicable to most other goods by the end of 2026 or should it be deemed that the US fails to meet its commitments or disrupts trade and investment with the EU, including by “discriminating against or targeting EU economic operators”. Additionally, a “sunset clause” has been introduced which would terminate the deal by the end of 2029, unless renewed by the Commission. 

While full ratification and adoption must now go through the EU plenary process, this represents a positive step for businesses and provides further clarity on the trading relationship with the US in the coming years. 

Pharmaceutical tariffs implementation 

In the pharmaceutical sector, the tariff framework introduced on 2 April remains intact, including the headline 100% tariff on patented pharmaceutical products. However, greater clarity has emerged as to how the regime will operate in practice. 

In particular, the importance of company-specific mitigation strategies has become increasingly apparent with a growing number of multinational pharmaceutical groups having entered into Most Favoured Nation pricing arrangements and/or onshoring commitments with the US Administration, thereby securing reduced or zero tariff outcomes for a defined period. 

Additionally, the staged implementation timelines (120 days for larger companies and 180 days for smaller entities) mean that the full implementation of these additional tariffs will not emerge until late July and September 2026 respectively. 

For EU-based exporters, continued focus should be placed on the scope of these measures, understanding whether products fall within scope or are contained within Annex IV and are thus subject to 0% tariffs. Where products are within scope, ensuring the reduced baseline tariff rate of 15% is applied at import in the US remains a critical mitigating factor.

Section 122 tariffs and IEEPA refund

Legal developments have also played a significant role in shaping the current tariff environment. In early May, the US Court of International Trade ruled that the 10% global tariff imposed under Section 122 had been unlawfully applied. 

However, the effect of this decision is currently limited, with relief granted only to the specific litigants in the case rather than to importers generally. An appeal by the US Administration is expected, and until further clarity / rulings are provided, the Section 122 tariff remain in place and are being applied on entry into the US.

In parallel, substantial progress has been made in relation to refunds of tariffs imposed under the now-invalidated IEEPA regime. The US Customs and Border Protection CAPE system, launched in April, is now fully operational and has begun processing claims at scale. However, it also brings with it compliance challenges, as the accurate submission and ongoing monitoring of claims through the CAPE system is essential to ensure timely recovery.

Executive Order on customs enforcement

On 3 June, the US Administration published an Executive Order on strengthening customs enforcement, with a clear focus on increasing transparency, financial accountability, and enforcement against non-compliant importers. 

In practical terms, this represents a shift toward a more controlled and compliance-driven import environment, with direct implications for EU-based exporters and businesses acting as non-resident importers into the US. The EO introduces stricter controls, including:

• Stricter Importer of Record (IOR) eligibility criteria, including mandatory domestic assets and/or increased bond coverage

• Expanded data and disclosure obligations, including beneficial ownership and business affiliations

• Removal of access to informal (low-value) entry procedures for foreign IORs

These measures will have significant implications for EU and Irish companies which export goods to the US and act as the importer of record in the US for such movements. Increased barriers for non-resident importers may result in a shift in structuring with the establishment of US based entities or further reliance on US based importers/distributors. 

The order explicitly targets practices such as undervaluation and incomplete importer information and all US importers should anticipate increased audits and post-entry reviews, tighter verification of rules of origin, valuation, and supply chain integrity and stronger enforcement linkages with areas such as forced labour and product compliance

Key actions businesses can take today

Stemming from the recent announcements, both on the 301 tariffs and the customs enforcement, it is essential for Irish companies, where the US is an active market, that a review of the supply chain is conducted to understand the responsibility which you hold in the US and the impact which these announcements will have. 

With respect to the 301 tariffs, it is crucial to maintain awareness of the implementation of tariff measures over the coming months and understand the impact which this has on your products.

We’re here to help you

Keeping up to date with US trade policies, trade agreements and new and existing tariff reviews which may lead to further tariff measures is crucial to assessing the risk to your supply chain and the impact these tariffs may have. Understanding your product portfolio and the impact that tariffs may have on your imports is an important first step. We are here to support your business with this analysis and navigating these choppy waters.