Home Business News Trump’s new Section 301 tariffs favour US trade partners despite identical violations, GTRI flags legal risks
The Trump administration is using Section 301 of the US Trade Act in a way that departs from its traditional purpose to preserve the benefits of recent trade agreements, creating different tariff outcomes for countries facing the same legal finding and exposing the policy to potential legal challenges, according to the Global Trade Research Institute (GTRI). 4 Min Read
The Trump administration is using Section 301 of the US Trade Act of 1974 in a way that departs from its traditional purpose to preserve the benefits of recent trade agreements, creating different tariff outcomes for countries facing the same legal finding and exposing the policy to potential legal challenges, according to the Global Trade Research Institute (GTRI).
Section 301 of the US Trade Act of 1974 is designed to address unfair trade practices by trading partners that harm US commerce, with any tariffs imposed under the provision expected to reflect the specific violation and be applied consistently across countries. However, GTRI said the US Trade Representative’s (USTR) forced labour determinations issued on July 23, 2026, indicate that the Trump administration is using Section 301 to preserve the commercial benefits of recent trade agreements and advance broader trade policy objectives. According to the think tank, countries that received the same Section 301 forced labour determination are now subject to different tariff treatment depending on whether they signed a trade agreement with the United States over the past two years.
GTRI argued that this departure from the traditional application of Section 301 is likely to invite legal challenges. The policy shift follows the US Supreme Court’s February 20, 2026 ruling, which struck down the reciprocal tariff regime and removed the legal basis for tariff concessions Washington had promised under trade agreements with the European Union, Japan, South Korea, Taiwan and Switzerland during 2025-26. Under those agreements, the US had offered partner countries a maximum tariff ceiling of 15%. Products facing US Most Favoured Nation (MFN) tariffs below 15% were required to pay only enough reciprocal tariff to bring the total duty to 15%, while products already attracting MFN tariffs of 15% or more continued to pay only the MFN rate. This “top-up” mechanism, rather than across-the-board tariff reductions, represented the principal commercial benefit of the agreements. GTRI said the new Section 301 forced labour tariffs effectively restore much of that benefit under a different legal authority.
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Under the July 23 determination, the European Union and Taiwan face a combined MFN plus Section 301 tariff ceiling of 10%, while Japan, South Korea and Switzerland are subject to a 12.5% ceiling. As a result, products with MFN tariffs below these thresholds pay only enough additional Section 301 duty to reach the ceiling, while products already attracting tariffs at or above the ceiling face no additional Section 301 levy.
GTRI Founder Ajay Srivastava noted that although the USTR concluded that the European Union, Japan, South Korea, Taiwan and Switzerland had failed to adequately address forced labour concerns, those economies were nevertheless granted preferential tariff treatment. The disparity is particularly evident in the treatment of India and the European Union. Although both received a 10% Section 301 forced labour determination, most Indian exports are subject to the applicable US MFN tariff plus the full 10% Section 301 duty. By contrast, EU exports pay only enough Section 301 duty to bring the total tariff to 10%. For instance, a product attracting a 6% MFN tariff would face a total duty of 16% if imported from India, compared with 10% if imported from the European Union. The same principle applies to Japan, South Korea and Switzerland, where the combined tariff is capped at 12.5%, while countries without comparable trade agreements generally pay the MFN tariff plus the full Section 301 duty.
GTRI said the differing tariff treatment for countries covered by the same Section 301 legal finding suggests that the levy is now being determined largely by the existence of a recent trade agreement with the United States rather than the underlying violation. While the think tank believes the policy is vulnerable to legal challenge because it departs from the traditional purpose of Section 301, it also argued that the commercial gains for partner countries appear limited. Srivastava noted that the US trade-weighted average MFN tariff is only about 2.2%, meaning the preferential tariff treatment delivers relatively modest additional market access in exchange for broad and long-term concessions on tariffs, regulations and domestic policies made by partner countries. (Edited by : Ajay Vaishnav)
