Tariff Talk

FLIP = Forced Labor Import Prohibition. The new name for the sweeping Section 301 tariffs that went into effect today. As the Section 122 10% emergency tariff expired at midnight, new tariffs took effect, impacting 60 global economies that account for well over 90% of imported goods. The in-transit exclusion is limited to goods already on the water (ocean shipments only) and requires those shipments to clear customs before July 28.

The new tariffs are intended to condemn modern forced labor by assessing either a 10% tariff (India, Malaysia, Sri Lanka, United Kingdom) or a 12.5% tariff on countries considered more egregious (China, Brazil, Israel, Norway, Philippines, Saudi Arabia, Thailand, Vietnam). A select group of countries follows a baseline rate formula reminiscent of the way reciprocal tariffs were handled for the European Union. The EU and Taiwan have a baseline rate of 10%, while Japan, South Korea, and Switzerland are set at 12.5%.

Canada and Mexico are subject to a 10% tariff unless the goods qualify under USMCA. However, not all free trade agreements receive the same treatment, with multiple agreements limiting relief to specific commodities, such as textiles and textile articles, for certain Central and South American countries.

There are exclusion lists that apply to all countries, as well as country-specific exclusion lists. Each excluded article list focuses on agriculture, raw materials, and products needed in manufacturing or that are key to increasing manufacturing capabilities. Also excluded are items subject to Section 232 tariffs, along with lists of aerospace and pharmaceutical articles. These lists reflect the more than 1,800 public comments received.

Given the short notice and the level of detail in each list, software programmers are gulping espresso and energy drinks (some of which, or their ingredients, are themselves excluded from the new tariffs) as they work to implement the exclusion lists and country-specific calculations. Importers should anticipate a few days of transition as systems, brokers, and Customs work to ensure all changes are implemented accurately, from entry to enforcement.

FORCED LABOR HTS LIST