Will Tariffs Ever Go Out of Style? Tariffs and Trade Agreement Negotiations Show No Signs of Slowing Down

In July, a flurry of trade actions reshaped the trade landscape: the 150-day Section 122 global tariffs expired, new Section 301 forced labor tariffs immediately took their place, various Agreements on Reciprocal Trade were negotiated, and the United States-Mexico-Canada Agreement (USMCA) entered a consequential annual-review period. 

This is on top of existing tariffs and several other possible tariff actions that loom on the horizon, including the structural excess capacity and production Section 301 investigation, Vietnam Section 301 investigation, Section 338 tariffs on Canada, and others.

For fashion and retail companies — brands, retailers, importers, licensees, and their compliance teams — these tariff developments are yet another reminder that the everchanging trade landscape requires ongoing monitoring: companies should continually assess both the scope of these measures and their company’s exposure and be ready to pivot as necessary. Below, we provide a practical overview of the key developments and practical next steps.

Section 122 Tariffs Expire; Section 301 Forced Labor Tariffs Take Effect Immediately

On July 24, the global tariffs imposed under Section 122 of the Trade Act of 1974 implemented to replace the International Emergency Economic Powers Act (IEEPA) invalidated by the US Supreme Court, expired after reaching their 150-day statutory limit. The Section 122 tariffs are the subject of several pending lawsuits disputing their legality. 

The Administration had long signaled its intent to use Section 301 of the Trade Act of 1974 to preserve prior tariff levels under IEEPA. Treasury Secretary Scott Bessent stated publicly that “if Section 301 investigations succeed, tariff rates are going to go back to exactly where they were.” This intent was also echoed by US Trade Representative (USTR) Ambassador Jamieson Greer. 

The USTR moved quickly, and Section 301 tariffs targeting forced labor practices took effect on July 24. See our prior alert on the proposed implementation. These tariffs were imposed on 60 economies found to have failed to implement or enforce forced labor import bans. Essentially, 10% additional tariffs were imposed on economies with existing forced labor import bans that the United States determined had not been adequately enforced, and 12.5% additional tariffs were imposed on economies that currently lack a meaningful forced labor import ban, with a few exceptions. The new tariffs are structured as follows.

Certain nuances and exemptions apply, including product-specific, country-specific, and sector-specific variations. For fashion and retail companies, the following exclusions from Section 301 forced labor tariffs may apply.

• Certain in-transit goods that were loaded onto a vessel and in transit before 12:01 AM ET on July 24 and entered before 12:01 AM ET on July 28, 2026.
• Goods of Canada and Mexico that qualify for preferential treatment and are entered duty-free under the USMCA.
• Textile and apparel goods of (1) Jordan or (2) of Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, or Nicaragua qualifying for duty free treatment under CAFTA-DR.
• Articles already covered by Section 232 tariffs.
• Country-specific negotiated exemptions in Annex II for the United Kingdom, EU member states, Switzerland, Malaysia, Cambodia, Guatemala, El Salvador, Argentina, Bangladesh, Taiwan, Indonesia, Ecuador, and Jordan.

Textile and Apparel Tariff-Rate Quotas

The USTR will establish tariff-rate quotas (TRQs) for Bangladesh, Cambodia, Indonesia, and Malaysia, with an initial duration of three years, to encourage those economies to import US cotton and textile goods. The TRQs will allow a certain volume of specific textile and apparel goods (based on each economy’s importation of US inputs), to enter the United States free of the Section 301 tariffs. Until the TRQs are established, the 10% Section 301 tariff will apply. While TRQs have historically been complicated to manage, they could present a cost advantage for brands that import from these four countries. 

301 Already Subject to Litigation 

As expected, the legality of the forced labor Section 301 tariffs is already the subject of litigation at the Court of International Trade. All three pending cases have been assigned to a panel comprising the same three judges. The plaintiffs have requested an expedited schedule, while the US Department of Justice has requested a unified schedule and the designation of one of the three cases as the lead. The plaintiffs challenge the tariffs on the grounds that the Administration is using forced labor as a method to reimpose tariffs previously imposed under IEEPA. We expect this litigation to move quickly, and we are monitoring developments closely. 

Other Ongoing Section 301 Actions 

Fashion importers should also monitor several additional Section 301 investigations and actions that remain active or pending, including actions addressing structural excess capacity, the Vietnam intellectual property (IP) investigation, and the China Section 301 four-year review. Each of these could produce new tariffs or modify existing tariff rates on goods relevant to apparel, footwear, textiles, accessories, and retail supply chains. The USTR also found that Brazil’s conduct across digital trade, IP protection, ethanol market access, and other areas is unreasonable and burdens US commerce and has taken action to impose an additional 25% tariff on most Brazilian goods effective July 22. Footwear and apparel (except certain worn clothing) are not exempt from the Brazil tariffs. 

Jordan Textile Provisions

Jordan is a significant sourcing country for US fashion and textile importers, including through the United States-Jordan Free Trade Agreement (FTA) and qualifying industrial zones. 

On July 21, the United States and Jordan signed the United States-Jordan Agreement on Reciprocal Trade (ART), supplementing the 2001 United States-Jordan FTA and addressing the impact of any future tariff actions, including those resulting from the Section 301 investigation on forced labor. As a result, the USTR lowered the 12.5% proposed Section 301 tariff rate to 10%. Consistent with the ART, several textile and apparel HTS categories across Chapters 42, 50-63, 65, 70, and 94, are also exempt from the additional Section 301 tariff, provided the goods originate in Jordan. 

USMCA Enters Annual Review: What It Means for North American Fashion Supply Chains

On July 1, the USMCA Free Trade Commission conducted the first statutorily mandated joint review of the USMCA — and the first statutorily mandated review of any US trade agreement. The parties had the option to renew the USMCA for another 16 years, through 2042. However, the United States declined to renew the USMCA, and current USMCA benefits will remain in place through July 2036. The agreement has now entered an annual joint review period during which the parties may decide at any time to renew for another 16 years, renegotiate terms, or any party may withdraw with six months’ notice. As part of the annual review negotiations, the United States is expected to seek improvements for key industries and sectors — or to leverage the threat of withdrawal to extract concessions. Autos, agriculture, and other key industries are likely to be the primary focus, but textile and apparel rules of origin are a perennial area of negotiation.

What These Developments Mean for Fashion Companies

Fashion brands and retailers can expect tariffs to continue to shape the Administration’s policy decisions and companies must be strategic to navigate, survive, and find opportunities in this uncertain trade landscape. 

• Companies can identify entries that were subject to IEEPA tariffs and submit refund requests, where available. We continue to monitor refund developments and litigatin for entries that are not yet eligible for the Consolidated Administration and Processing of Entries (CAPE) refund process. Companies should take protective steps to preserve rights to refunds on those entries. 
• We are monitoring the ongoing Section 122 litigation in the event there becomes an opportunity for importers to recover tariffs. Companies should consider whether to file protests on Type 11 entries that are likely close to the protest deadline in order to preserve rights to possible refunds. 
• The Section 301 forced labor tariffs apply broadly, and importers will want to map their supply chains to understand which sourcing countries fall into the 10% vs. 12.5% tier or have a tariff cap, and whether an exclusion may apply. 
• Companies that utilize the USMCA can continue to monitor annual negotiations between the parties and how those negotiations may impact their import profiles.
• Look out for opportunities; while the tariffs continue to present challenges, there are opportunities for tariff relief that may become a competitive advantage for certain importers. These new regimes include tariff carveouts for certain fashion and retail products from the USMCA region, DR-CAFTA region, Jordan, Bangladesh, Cambodia, Indonesia, and Malaysia, which could be a significant opportunity for cost advantages. But, be prepared for US Customs and Border Protection origin and FTA verifications. 
• Continue to explore duty mitigation avenues. There are several legal duty savings regimes such as first sale, tariff engineering, and others. 
• Ensure that you have a robust Customs compliance program in place and that your tariff classification, value, origin, and other declarations are correct because we are already seeing a significant increase in CBP inquiries and enforcement actions.