USTR Launches Massive Section 301 Tariff Overhaul as Section 122 Expiration Nears

USTR Launches Massive Section 301 Tariff Overhaul as Section 122 Expiration Nears

The Trump administration is executing a rapid transition in trade policy as the temporary 10% global import surcharge, imposed under Section 122 of the Trade Act of 1974, approaches its statutory 150-day limit at 12:01 a.m. EDT on July 24, 2026. Sidelined by a series of legal setbacks—including a May 2026 U.S. Court of International Trade ruling that the administration's stated justification of a "balance-of-payments deficit" did not meet the legal definition intended by Congress—the administration is shifting to Section 301¹ of the Trade Act of 1974. Unlike Section 122, Section 301 carries no statutory rate ceiling and no fixed expiration date, providing a more durable mechanism to maintain high import taxes.

The Section 301 Tariff Offensive on Brazil

On July 15, 2026, U.S. Trade Representative Jamieson Greer announced a sweeping 25% tariff on nearly all imports from Brazil, making it the first country targeted under this new Section 301 strategy. The tariffs, scheduled to take effect on July 22, 2026 (two days before the Section 122 tariff expires), follow a yearlong investigation into Brazilian trade practices, including digital payment regulations, intellectual property enforcement, and illegal deforestation.

According to reports:

"The U.S. will hit Brazil with new 25% duties on its furniture, ethanol, machinery, footwear, sugar and other goods, launching a new wave of tariffs that could affect dozens of countries as President Donald Trump's administration seeks to rebuild its leverage on major trading partners after legal setbacks."

While the final order maintained and expanded exemptions for key commodities such as beef, coffee, rare earths, and aircraft parts, the American Chamber of Commerce for Brazil reported that the tariffs will still affect approximately 18% of Brazil's exports to the U.S., representing about $7 billion in annual trade.

Brazilian President Luiz Inácio Lula da Silva condemned the decision, stating that the U.S. action lacks justification, and vowed that Brazil would immediately invoke instruments under its "Reciprocity Law" and challenge the tariffs within the World Trade Organization (WTO) dispute settlement mechanism.

Impending 60-Economy Forced Labor Tariffs

The unilateral action against Brazil serves as a warning to other major trading partners. The U.S. Trade Representative's separate Section 301 investigation into 60 economies—including Canada, Mexico, Japan, and the European Union—over their alleged failure to adequately block imports made with forced labor is due to conclude on July 24, 2026, the exact day the Section 122 surcharge expires.

The Congressional Research Service noted that the USTR "might aim to finalize those tariff actions by late July 2026." The proposed framework under review would establish a 10% tariff on countries that lack a ban on forced-labor imports and a 12.5% tariff on those that have a ban but fail to enforce it. For Brazil, which is caught in both investigations, this could result in an additional 12.5% duty on top of the 25% tariff, bringing the total tariff burden on affected Brazilian goods to 37.5%.

Trade analysts note that the administration is racing to find new legal justifications for tariffs faster than the courts can strike them down. As trade policy analyst Alfredo Carrillo Obregón observed, Section 122 was "always meant to be a bridge" to a more durable, permanent tariff authority under Section 301.