Client Advisory: Section 301 Developments: Forced Labor, Brazil & Vietnam

WHAT'S THE LATEST

In late May and early June 2026, the Office of the U.S. Trade Representative (USTR) launched three separate Section 301 actions in rapid succession-each targeting a different trade risk and each scheduled to reach a decision before July 24, 2026, when the Section 122 global surcharge expires by statute.

1. A proposed forced-labor tariff action covering 60 economies
2. A proposed 25% Section 301 tariff on certain Brazilian products
3. The initiation of a new Section 301 investigation into Vietnam's intellectual property practices

All three actions remain proposed or investigatory. No duties are currently in effect and no HTSUS changes have been issued. However, the timing, scope, and potential for tariff stacking make these among the most consequential near-term enforcement actions since the February 2026 court decision against IEEPA tariff authority.

Why this matters: Section 301 has no statutory rate cap and no expiration date. If finalized, these measures would replace Section 122 as the administration's primary tariff tool and could apply permanently.

WHAT WE KNOW

Three Active Section 301 Actions:

Vietnam: A Concentrated Section 301 Risk

Vietnam is the only economy currently subject to three simultaneous Section 301 tracks, all expected to converge by July 24.

Why this matters: Vietnam ran a $178B goods trade surplus with the U.S. in 2025 and is a major final-assembly and transshipment hub. Importers should assume stacking exposure and model multiple combined-rate scenarios now.

Why July 24 is the Inflection Point

• Section 122 (15% global surcharge) expires July 24, 2026, and cannot be extended.
• The administration has deliberately timed these Section 301 actions to conclude before that date.
• Section 301 has no sunset and no rate ceiling.

Implication: Importers currently paying 15% under Section 122 may transition to permanent, country- and product-specific Section 301 duties, potentially at similar or higher combined rates.

Additional Key Details

• Forced labor duties stack on top of existing Section 232 and product-specific Section 301 tariffs already in place. They do not replace them.
• Textile/apparel reduced-rate mechanism could provide limited relief, but details remain pending.
• Brazil Section 232 goods are excluded. Importers of steel, aluminum, or copper-based Brazilian goods should verify Section 232 applicability.
• Vietnam's Priority Foreign Country designation is the highest-severity IP designation and a formal precursor to Section 301 action.
• Public comment windows are exceptionally short. June 22 is the deadline for hearing appearance requests for both Brazil and the forced labor investigations.

SEKO'S GUIDANCE

SEKO recommends that importers take the following actions:

• Map exposure across all three actions. Identify every country of origin in your import portfolio against the 60-economy forced labor list, Brazil exposure, and Vietnam-related risks. Many importers will be impacted by more than one action simultaneously.
• Engage in public comments now. Comment and hearing deadlines begin June 22. If your products may qualify for exemptions-particularly under Brazil's proposed carve-outs or the forced labor textile/apparel mechanism-retain trade counsel and file promptly.
  • Submit comments at: https://comments.ustr.gov/s/
    • Brazil docket: USTR-2026-0331
    • Brazil hearing docket: USTR-2026-0397
    • Vietnam IP: USTR Federal Register Notice (May 29, 2026)
• Model tariff stacking scenarios. Section 301 duties add to, not replace, existing Section 232 and legacy Section 301 tariffs. Vietnam-origin goods are the clearest example, but stacking risk applies broadly.
• Reassess Brazil-origin sourcing. A 25% Section 301 tariff would materially alter landed costs. Identify which products fall outside proposed exemptions and review pricing, contracts, and open purchase orders.
• Prepare for front-loading risk. If determinations are issued before July 24 as expected, importers may rush to enter goods ahead of effective dates. Coordinate early with your SEKO team to evaluate ocean and air capacity strategies.
• Preserve refund rights where applicable. Although relief on Section 122 duties is currently limited, consider steps to preserve refund claims while litigation continues.

SEKO's trade compliance team is monitoring all three investigations closely. If you have questions, please reach out to your SEKO representative, or email us at [email protected].