Short answer: at 12:01 a.m. on July 24, 2026, a new tariff of 10% to 12.5% took effect on imports from 60 countries, covering an estimated 99.4% of everything the United States buys from abroad. It replaces a temporary 10% worldwide tariff that expired the same moment, and it rests on a different, more legally durable law than the tariff it replaces. This is a separate action from the 50% tariff on Canadian goods announced four days earlier. The two can stack on certain products, but most everyday trade is not touched by both at once.
If you have been following tariff news this week, it is easy to lose track of which tariff is which. Here is what actually changed, why it happened, and what it means for prices.
Table of Contents
- Why this happened: a fast legal timeline
- Who's affected, and why "forced labor"
- Does this stack with the Canada tariff?
- How much does a 10-12.5% tariff actually add to a price tag?
- Running your own numbers
- What happens next
- Worked examples
- Common mistakes when reading tariff news
- Frequently asked questions
- References
Why This Happened: A Fast Legal Timeline
This tariff did not come out of nowhere. It is the third stop on a legal path that started earlier this year, and each stop used a different law for a reason.
- February 2026: the Supreme Court struck down Trump's sweeping "Liberation Day" tariffs, ruling that the emergency powers law he had invoked, the International Emergency Economic Powers Act (IEEPA), did not actually authorize tariffs. The ruling forced the administration to refund tariffs already collected.
- February 2026: in response, Trump imposed a temporary 10% tariff on nearly every country under a different law, Section 122 of the Trade Act of 1974. That provision caps how long a president can use it: 150 days, with no extensions available.
- July 20, 2026: separately, the White House used yet another provision, Section 338 of the Tariff Act of 1930, to impose a 50% tariff specifically on a range of Canadian goods, citing Canadian trade restrictions on US alcohol, autos, and dairy.
- July 24, 2026: the 150-day clock on the Section 122 stopgap tariff ran out at midnight. In its place, the administration activated tariffs under Section 301 of the Trade Act of 1974, the same legal tool used for the long-running China tariffs from Trump's first term, which survived court challenges. This is the tariff taking effect today.
The shift from Section 122 to Section 301 matters beyond the legal technicality. Section 122 was always temporary by law, a 150-day clock that could not be extended no matter what. Section 301 has no built-in expiration, and it has already withstood legal challenges once, back when it underpinned the China tariffs of Trump's first term. That track record is why trade analysts are treating this round as a more permanent floor rather than another stopgap that will quietly expire in a few months.
Think of it this way: Section 122 was a bridge law, useful precisely because it was fast to invoke but guaranteed to run out. Section 301 is built for the long haul, with its own investigation and comment process baked in. Moving from one to the other is the administration trading speed for durability.
Who's Affected, and Why "Forced Labor"
The official justification for this round is different from the Canada tariff. The Office of the US Trade Representative (USTR) says the 60 targeted countries have inadequately enforced bans on goods made with forced labor, and that the tariff is meant to close that gap. The list covers nearly all of America's major trading partners: Canada, Mexico, the EU, the UK, India, and China are all on it, at rates between 10% and 12.5% depending on the country.
A few things are exempt from this specific tariff:
- Oil, gas, and fertilizer are carved out entirely.
- Goods that already qualify for duty-free treatment under the USMCA (the North American trade agreement covering the US, Mexico, and Canada) are spared, meaning a large share of everyday Canada-US and Mexico-US trade is not touched by this particular tariff at all.
- Countries that tightened their own forced-labor enforcement after the tariffs were first proposed in June saw their rate reduced. India's rate, for example, dropped from an initially proposed 12.5% to 10%.
More may be coming. The USTR has a separate investigation open into whether 16 countries, representing another 70% of US imports, are flooding markets with overproduced goods at artificially low prices. That probe has not concluded yet, so treat it as a possibility to watch, not a confirmed next step.
Does This Stack With the Canada Tariff?
This is the question we have gotten the most since the Canada tariff story broke last week, and the honest answer is: it depends on the specific product.
- A USMCA-qualifying Canadian good (most machinery, many auto parts, and other goods that meet the trade agreement's rules of origin) is exempt from today's new baseline tariff, and it was never covered by the Canada-specific tariff either unless it falls into one of the named categories. For a lot of ordinary cross-border trade, nothing changes today.
- A non-USMCA-qualifying Canadian good outside the named categories picks up the new 10% baseline tariff on its own.
- A Canadian good in one of the categories named in the July 20 action, lumber, cement, alcohol, and a handful of others, can face both: the 10% baseline plus the 50% sector-specific tariff, for a combined rate as high as 60% on the imported cost.
The takeaway: this is not a blanket doubling-up of tariffs on Canada. It is two different tariff actions with different triggers, and only a specific slice of Canadian goods sits under both at once. Most cross-border trade lands in the first or second bucket, not the third.
How Much Does a 10-12.5% Tariff Actually Add to a Price Tag?
We already published a full breakdown of the pricing math behind a tariff: Does a 50% Tariff Raise Prices 50%? walks through exactly how a tariff rate turns into a shelf-price increase, with worked examples across different import-cost shares. The short version: a tariff only applies to the imported-cost portion of a product's price, not to domestic labor, freight, retail margin, or tax. So the final price increase is consistently smaller than the tariff rate itself, scaled by how much of the product's cost is actually the imported input.
That relationship is a clean, calculable one, not just a rule of thumb. When margin and tax are both applied as percentages rather than fixed dollar amounts, the percentage increase in the final shelf price equals the tariff rate multiplied by the imported share of pre-tariff cost. At today's 10% to 12.5% rate, that effect is proportionally much smaller than the 50% Canada-specific tariff.
| Imported share of cost | Price increase at 10% tariff | Price increase at 12.5% tariff | Price increase at 60% stacked tariff |
|---|---|---|---|
| 20% | 2.0% | 2.5% | 12.0% |
| 50% | 5.0% | 6.25% | 30.0% |
| 80% | 8.0% | 10.0% | 48.0% |
| 100% | 10.0% | 12.5% | 60.0% |
A product that is half imported cost and half domestic cost saw roughly a 25% shelf-price increase under the 50% Canada tariff in our earlier worked example. The same product under today's 10% baseline tariff sees something closer to a 5% increase, and under the 12.5% rate, about 6.25%. Only the stacked 60% rate, which applies to a narrow list of named Canadian categories, gets anywhere near the size of increase people picture when they hear "tariff" in a headline.
Running Your Own Numbers
To run your own numbers on anything you are pricing or buying:
New cost, need a new price? The Markup Calculator turns your updated cost and target margin into a selling price.
Want the tax-included total a customer actually pays? The Sale Price Calculator has an optional tax field for exactly that.
Trying to back out how much of a price increase is tariff-driven versus tax? The Reverse Sales Tax Calculator separates the two.
What Happens Next
Tariffs apply going forward, to goods crossing the border after the effective date, not retroactively to inventory already sitting on shelves. So the practical price effect shows up gradually, as new stock replaces old stock, not overnight.
With midterm elections in November, the administration is taking on some political risk by rolling out a broader tariff right as cost-of-living concerns are already running high. It is an open question how much of this specific 10% to 12.5% increase gets absorbed by importers versus passed on to shoppers in the months ahead. Earlier tariff rounds, including the 2018 to 2019 China tariffs, showed absorption tends to shrink over time as importers run out of room to eat the cost, so a slow, partial pass-through now does not rule out a fuller one later.
Worked Examples
Example 1: A everyday import at the 10% baseline rate
A product has a $10 import cost and $10 in domestic costs (labor, freight, overhead), a 25% retail margin, and 8% sales tax, exactly the baseline case from our tariff pricing math article.
- No tariff: ($10 + $10) × 1.25 × 1.08 = $27.00 final price
- With 10% tariff on the import line: import cost becomes $11. ($11 + $10) × 1.25 × 1.08 = $28.35 final price
- Price increase: ($28.35 − $27.00) ÷ $27.00 × 100 = 5.0%
Example 2: A mostly-imported good from India at 12.5%
A textile product has an $18 import cost and only $2 in domestic finishing costs (90% imported), a 30% margin, and 7% tax.
- No tariff: ($18 + $2) × 1.30 × 1.07 = $27.82 final price
- With 12.5% tariff: import cost becomes $20.25. ($20.25 + $2) × 1.30 × 1.07 = $30.95 final price
- Price increase: ($30.95 − $27.82) ÷ $27.82 × 100 = 11.25%, almost exactly the 12.5% tariff rate, because so little of the cost is domestic
Example 3: Canadian lumber facing the stacked 60% rate
A shipment of Canadian softwood lumber, one of the named Section 338 categories, has a $16 import cost and $4 in domestic costs (milling, transport), a 20% margin, and 6% tax. It faces both the new 10% baseline and the 50% Section 338 tariff, a combined 60% on the import line.
- No tariff: ($16 + $4) × 1.20 × 1.06 = $25.44 final price
- With 60% stacked tariff: import cost becomes $25.60. ($25.60 + $4) × 1.20 × 1.06 = $37.65 final price
- Price increase: ($37.65 − $25.44) ÷ $25.44 × 100 = 48.0%, close to the full 60% rate because 80% of the cost is imported
Example 4: A mostly-domestic product barely moves
A product assembled in the US uses a small imported component: $3 import cost, $17 in domestic labor and materials (15% imported), a 25% margin, and 8% tax.
- No tariff: ($3 + $17) × 1.25 × 1.08 = $27.00 final price
- With 10% tariff: import cost becomes $3.30. ($3.30 + $17) × 1.25 × 1.08 = $27.41 final price
- Price increase: ($27.41 − $27.00) ÷ $27.00 × 100 = 1.5%, barely noticeable, because most of the cost was already domestic
Example 5: A USMCA-qualifying good sees no change at all
A Canadian-made auto part that meets USMCA rules of origin has the same $10 import cost and $10 domestic cost as Example 1.
- The part is exempt from the new baseline tariff under the USMCA carve-out, so the tariff rate applied to its import cost is 0%, not 10%.
- Final price stays at $27.00, identical to the no-tariff case.
- This is the exact scenario described in the "Does This Stack With the Canada Tariff?" section: for a large share of ordinary Canada-US trade, nothing about today's news changes the shelf price at all.
Common Mistakes When Reading Tariff News
Assuming every country pays the same rate. The 60-country list runs from 10% to 12.5% depending on the country's forced-labor enforcement record, and a handful of product categories from Canada face a separate, much higher stacked rate. There is no single "the tariff rate" to plug into a calculation.
Confusing this round with the Canada-specific tariff. They are two different legal actions, announced four days apart, with different triggers and mostly different products. A Canadian good can be affected by one, both, or neither, depending on its USMCA status and category.
Assuming a tariff rate equals a price increase. As the worked examples above show, a 10% tariff on a mostly-domestic product might move the price less than 2%, while the same rate on an almost entirely imported product moves it close to the full 10%. The import share of the cost, not the headline rate alone, drives the outcome.
Treating this as a permanent, unchangeable rate. Section 301 tariffs do not expire on a fixed clock the way Section 122 did, but that does not mean the rate is frozen. Rates have already shifted once during the comment period (India's rate dropped from 12.5% to 10%), and the ongoing 16-country overproduction investigation could add further changes.
Assuming existing shelf stock gets repriced overnight. Tariffs apply to goods crossing the border after the effective date, not retroactively to inventory already paid for and sitting on a shelf. The visible price effect phases in as old stock sells through and new, tariffed stock replaces it.
Frequently Asked Questions
How many countries are affected by the new tariffs?
Sixty countries, accounting for an estimated 99.4% of everything the United States imports, according to the Office of the US Trade Representative.
When did the new tariffs start?
At 12:01 a.m. ET on July 24, 2026, the same moment the previous 10% worldwide stopgap tariff expired.
Do the new tariffs affect Canada and Mexico?
Yes, at the 10% baseline rate, but goods that already qualify for duty-free treatment under the USMCA are exempt. Canada also faces a separate 50% tariff on specific categories like lumber, cement, and alcohol, announced July 20 under a different law.
Why are there new US tariffs right now?
The administration says the 60-country tariff is meant to pressure trading partners into better enforcing bans on forced-labor-made goods. It also serves as a more legally durable replacement for a temporary tariff that was set to expire the same day, after the Supreme Court ruled the administration's original tariffs illegal.
How much will prices go up because of the new tariffs?
It depends on how much of a product's cost is the imported component. As a rough guide, a product that is half imported cost and half domestic cost would see a shelf-price increase of roughly half the tariff rate, so somewhere around 5% to 6% for a 10% to 12.5% tariff, all else equal. The Sale Price Calculator and Markup Calculator can run the exact numbers for your own cost and margin.
Is this the same as the 50% Canada tariff from last week?
No. They are two separate tariff actions under two different laws, announced four days apart, with different triggers. They can apply to the same product in specific cases, but most trade is not hit by both.
What is Section 301 and why does it matter here?
Section 301 of the Trade Act of 1974 is the legal provision behind today's tariff, the same one used for the long-running China tariffs from Trump's first term, which survived court challenges. Unlike the Section 122 stopgap it replaces, Section 301 has no built-in 150-day expiration, which is why analysts see this round as a more durable floor rather than another temporary measure.
Can the tariff rate change again?
Yes. Rates already shifted once during the comment period, India's went from an initially proposed 12.5% down to 10% after the country tightened forced-labor enforcement. The USTR's separate, unresolved investigation into 16 countries over alleged overproduction could bring further changes on top of the current rates.
Does the USMCA exemption apply to Mexico as well as Canada?
Yes. The USMCA is a three-country agreement covering the US, Mexico, and Canada, so any Mexican good that meets its rules of origin gets the same duty-free exemption from the new baseline tariff as a qualifying Canadian good.
How is this different from the tariffs the Supreme Court struck down?
The struck-down "Liberation Day" tariffs relied on IEEPA, an emergency powers law the Court ruled does not actually authorize tariffs. Today's tariff instead uses Section 301, a trade law specifically built for this purpose that has already survived a legal challenge once, during the first-term China tariffs.
What is the 16-country overproduction investigation?
A separate, still-open USTR probe into whether 16 countries, representing roughly 70% of US imports, are flooding markets with overproduced goods sold at artificially low prices. It has not concluded, so it is a possible future tariff action to watch, not a change that has taken effect.
References
- Office of the United States Trade Representative: the source for the 60-country tariff list, rates, exemptions, and the stated forced-labor justification. Country lists and rates can change; confirm current status before making purchasing or pricing decisions based on this article.
- Cornell Legal Information Institute: 19 U.S.C. § 2411: the text of Section 301 of the Trade Act of 1974, the legal basis for the tariffs described in this article.
- Does a 50% Tariff Raise Prices 50%?: our earlier breakdown of the cost-plus math behind the separate, Canada-specific 50% tariff, including the full worked derivation of the formula used in the table and examples above.