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The global import surcharge that has governed nearly every shipment entering the United States since late February expired in meaning on Wednesday morning, when U.S. Trade Representative Jamieson Greer took his seat before the Senate Finance Committee and spent hours defending a trade architecture that is simultaneously expiring, unfinished, and already being challenged in court. A 25% tariff on most Brazilian imports took effect at 12:01 a.m. ET Wednesday — the first country-specific Section 301 action completed since the Supreme Court's February ruling killed the administration's preferred tool. In 48 hours, at 12:01 a.m. ET Friday, the 15% Section 122 global surcharge will expire by statute, and the replacement — a proposed permanent forced-labor tariff framework covering 60 countries and 99% of U.S. imports — has still not been formally announced. Exchange rates in this article appear in USD throughout; no currency conversions are required.
Greer Arrived With Wins and a 48-Hour Clock
Wednesday's hearing before Senate Finance Committee Chairman Mike Crapo (R-Idaho) was originally scheduled for April 23, postponed after the chamber ran a vote-a-rama session into the early hours of April 22 and simply ran out of time. The rescheduled session gave Congress its first formal opportunity to interrogate Greer on five months of unprecedented tariff turbulence — and Greer arrived with a prepared defense.
The administration's posture centers on a set of genuinely large numbers. The U.S. goods trade deficit with China fell to $202.1 billion in 2025, a 31.6% drop from 2024 and the lowest annual bilateral deficit since 2004 according to Census Bureau data. Monthly U.S. exports set consecutive all-time records through the first quarter of 2026, hitting $302.1 billion in January and $314.8 billion in February, figures the U.S. Trade Representative's office called milestones "in 250 years of American commerce." Manufacturing employment posted positive gains in the first quarter of 2026 after years of declines, according to Greer's testimony. Agricultural exports rose by double digits in 2025, Greer told the committee.
Critics on the committee countered that those numbers coexist with a legal record of unusual fragility: one Supreme Court defeat, a temporary replacement statute that runs out in 48 hours, and a permanent replacement framework that was supposed to be finalized by July 20 and has not been announced.
How the Tariff Floor Collapsed — and What Was Built on the Rubble
The administration's current position is the product of a legal defeat it did not expect to absorb this quickly. On February 20, 2026, the Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (IEEPA) — the statute underpinning the administration's entire "Liberation Day" tariff architecture — does not authorize the president to impose tariffs. Chief Justice Roberts, writing for the majority, held that tariffs are not enumerated among IEEPA's granted powers, and that under the "major questions" doctrine, Congress must provide clear, explicit authorization before the executive can claim authority of such sweeping economic consequence. The Congressional Research Service summarized the ruling's scope and confirmed the court vacated tariffs that had covered virtually every import entering the United States.
Within hours, the White House invoked Section 122 of the Trade Act of 1974 — a provision designed for balance-of-payments emergencies — to impose a 10% global import surcharge, effective February 24, later raised to 15%, the statute's hard ceiling. The problem is structural: Section 122 is a stopgap. Congress capped it at 150 days and reserved any extension to a legislative act. No extension has been introduced. When the clock strikes midnight Thursday — 12:01 a.m. ET Friday — the surcharge lapses automatically by operation of law. According to trade-weighted estimates by Capital Economics, the average effective U.S. tariff rate will fall from approximately 13% to approximately 7.2% when that happens.
That gap was always the plan. USTR launched 60 parallel Section 301 investigations in March 2026, targeting every major U.S. trading partner's alleged failure to ban goods produced with forced labor. On June 2, USTR issued its findings — all 60 economies were found to have failed, either by lacking a prohibition or failing to enforce one. The proposed replacement: a 10% tariff on 15 economies that have taken partial steps toward compliance, and 12.5% on the remaining 45. Unlike Section 122, Section 301 duties carry no statutory rate cap and no expiration date. Greer told CNBC's "Squawk Box" on Tuesday that those tariffs would cover "about 99% of our trade" and that "we expect to see some action soon."
That "soon" was supposed to be last Sunday. USTR set itself an internal deadline of July 20 to finalize the Section 301 forced-labor determination before Section 122 expired, a deadline noted by trade analysts tracking the transition. That deadline passed without a public announcement. As of Wednesday's hearing, the Section 301 replacement is proposed but not final, and the rebuttal comment period on the proposed rates closed July 16.
What the Section 301 Framework Actually Does — and Why It May Not Last
Section 301 of the Trade Act of 1974 is the legal architecture the administration is betting on to replace emergency power it no longer has. The statute authorizes USTR to investigate and impose tariffs on foreign countries whose acts, policies, or practices are "unreasonable, unjustifiable, or discriminatory" and burden U.S. commerce. The forced-labor theory — that any country without an adequately enforced ban on imported goods made with forced labor satisfies that definition — is novel at this scale. Prior uses of Section 301 targeted specific countries for specific IP violations or technology transfer practices; applying it simultaneously to 60 economies representing virtually all U.S. trade is, as Brookings Institution scholars noted, an argument that has attracted skepticism from the trade law academic community.
The skepticism carries legal implications. The same "major questions" doctrine that the Supreme Court used to kill IEEPA tariffs — the principle that executive agencies cannot claim powers of vast economic consequence without explicit congressional authorization — applies equally to USTR, which is an executive agency. Using Section 301, a statute written to address specific unfair trade practices by specific trading partners, to impose a de facto global tariff on 60 countries covering 99% of U.S. imports, may itself constitute exactly the kind of extraordinary power that the major questions doctrine requires Congress to authorize explicitly. Legal scholars at Orrick and Snell & Wilmer have already flagged the anticipated challenge. If it proceeds to litigation — and the Court of International Trade will have exclusive jurisdiction — the administration would be defending a theory of tariff authority it assembled in three months, against a court that has shown it will scrutinize these claims. The Congressional Research Service has confirmed that Section 301 actions by USTR are subject to Administrative Procedure Act review, making them potentially more legally exposed than prior tariff regimes.
The TariffsTool analysis noted pointedly that the Federal Circuit appeal over Section 122's legality is "quietly running the same script that ended with $166 billion in IEEPA refunds." That figure — a widely cited estimate of the total refund pool opened when IEEPA tariffs were struck down — captures the scale of financial exposure that follows when a tariff regime loses in court, as confirmed by the IEEPA refund process documentation.
Brazil Becomes the Template
Wednesday morning also marked the practical activation of what USTR is presenting as the Section 301 template: a country-specific action backed by a full investigative record, public comment process, and formal findings. The 25% tariff on most Brazilian imports followed a year-long investigation that USTR directed at the president's instruction in July 2025. After more than 360 public comments, a public hearing on September 3, 2025, and a second two-day public hearing July 6–7, 2026, USTR concluded that Brazil's practices across six categories — digital trade restrictions, preferential tariff treatment disadvantaging U.S. goods, anti-corruption enforcement gaps, intellectual property protection failures, blocked ethanol market access, and illegal deforestation — were unreasonable and burdensome to U.S. commerce.
Carve-outs exist for goods already subject to Section 232 duties, civil aircraft, pharmaceuticals, beef, orange juice, coffee, and certain energy products. The carve-out list was modified after public comment: high-purity dissolving pulp lost its exemption; certain chemical exemptions were narrowed to pharmaceutical applications only.
The Brazil action is strategically significant beyond its bilateral scope. It is the first major country-specific Section 301 action since IEEPA was struck down, and it demonstrates that USTR can assemble an investigative record sufficient to impose tariffs on a major trading partner without invoking emergency powers. Whether that approach scales to 60 simultaneous actions — producing a global tariff regime through 60 individual country findings — is the legal and operational question the forced-labor framework will face.
Canada and the Smoot-Hawley Clause Nobody Expected
If the Section 301 forced-labor framework represents the administration's methodical approach, the Canada action represents something else: a legal authority so rarely invoked it had never been used until July 20.
On Sunday, President Trump signed three proclamations invoking Section 338 of the Tariff Act of 1930 — a provision of the Smoot-Hawley legislation that empowers the president to impose duties of up to 50% on any country whose trade practices discriminate against U.S. commerce. The proclamations impose 50% tariffs on three categories of Canadian goods: alcoholic beverages, dairy products, and a broad basket of non-automotive goods that extends well beyond those three sectors to include hockey sticks, cement, candles, and down jackets.
The tariffs will take effect at 12:01 a.m. ET on August 19, 30 days from signing. They apply regardless of whether goods qualify for preferential treatment under the U.S.-Mexico-Canada Agreement — a point the proclamations state explicitly, and one that has significant practical implications: USMCA currently provides no shelter.
The use of Section 338 rattled trade lawyers for two reasons. First, no president had ever invoked it in the provision's nearly 100-year history; Axios confirmed the law's revival from dormancy. Second, its legal durability is genuinely contested. Peter Harrell, a White House economic adviser under former President Biden, told The Globe and Mail that a legal challenge could rest on the argument that Smoot-Hawley has been superseded by subsequent trade legislation. John Veroneau, another trade expert, told Reuters that while the tariffs may be technically lawful under Section 338's text, they "at a minimum violate the spirit" of the statute, which was written to create a world where countries apply equivalent tariffs to the same goods across all trading partners, as Time Magazine reported. Scott Lincicome of the Cato Institute warned that the invocation of Section 338 could be used to justify tariffs on other countries' imports, creating what he called "massive uncertainty" for global trade, as Fortune reported. The National Law Review stated flatly that "as an untested authority, legal challenge is nearly guaranteed."
The administration's stated rationale focuses on Canada's provincial liquor restrictions on U.S. alcoholic beverages, the dairy supply-management regime, and caps Canada placed on U.S. vehicle exports from manufacturers that had been reshoring to the United States. Greer's statement accompanying the action framed it as a response to a country that "continues to retaliate against the United States for its efforts to rebalance trade."
Canadian Prime Minister Mark Carney said Tuesday he had spoken directly with President Trump and that both sides had agreed to "deepen and speed up" negotiations over the coming weeks, PBS NewsHour reported. The 30-day effective date creates a potential negotiating window before the tariffs actually bite.
What USMCA Actually Is Right Now
The backdrop to the Canada action is an agreement in transition. USMCA contains a mandatory six-year review clause; on July 1, 2026, that review was triggered when the Trump administration formally declined to renew the treaty in its current form, as confirmed by CSIS's analysis of the review's implications. The announcement does not immediately end USMCA — the agreement enters a period of annual reviews that could extend through 2036 — but it signals that the trilateral framework governing nearly $1.6 trillion in annual North American trade is under active renegotiation.
A third round of bilateral U.S.-Mexico negotiations launched in Mexico City on Tuesday, as Foreign Policy reported, focused on steel, aluminum, automobiles, and labor standards. Canada is conspicuously absent from that bilateral track. The Section 338 proclamations are widely read by analysts as a negotiating cudgel as much as a trade remedy — a signal that Canada's path back to the table runs through the administration's stated grievances on autos, dairy, and alcohol, not through USMCA's dispute-resolution mechanisms.
The EU Deal: One Corner of Stability
Amid the turbulence, the administration's relationship with the European Union represents the one area of relative predictability. The Turnberry Agreement — a framework deal struck between Trump and EU Commission President Ursula von der Leyen in Scotland in July 2025 — set a 15% tariff ceiling on most EU exports to the United States in exchange for the EU eliminating tariffs on all U.S. industrial goods and improving market access for U.S. agricultural products including lobster. After months of delay, the EU's implementing legislation cleared both the European Parliament and the Council and entered into force on July 1, 2026.
The deal contains a safeguard: the EU can suspend its zero-tariff concessions on U.S. goods if the United States does not bring steel and aluminum tariffs on EU products below 15% by December 31, 2026 — a provision that could create friction as the broader tariff landscape settles. The European Commission has separately presented the U.S. with a list of EU goods, valued at approximately €150 billion (approximately $171 billion at the current mid-market exchange rate of $1.14 per euro as of July 22, 2026 — conversions are approximate), for which it is seeking exemptions from the 15% ceiling. A joint EU-U.S. action plan on critical minerals supply chain resilience was announced by Greer's office in April, signaling continued engagement beyond the tariff framework.
What Senators Heard — and What They Did Not
The Finance Committee hearing brought sharply divergent lines of questioning. Republican members pressed Greer on the timeline for finalizing Section 301 duties before Friday's expiration, and on the legal durability of the replacement framework given the court record. Democrats focused on consumer costs, the legality of Section 338, and the USMCA renegotiation — a treaty with direct implications for U.S. agricultural exports and manufacturing supply chains.
Greer's core argument before the committee was that the numbers support the strategy: a $202.1 billion goods trade deficit with China, the lowest in more than two decades; consecutive record monthly exports; positive manufacturing employment after years of decline. Critics counter that the legal instability — IEEPA struck down, Section 122 expiring, Section 301 unfinished, Section 338 legally untested — reflects a tariff strategy built on contested authority in which the rate a business pays can change materially within days.
The Legal Exposure Section 301 Cannot Escape
The most significant thing Greer's testimony cannot resolve is structural: the same legal doctrine that killed IEEPA is the doctrine that Section 301 will face in court. The major questions doctrine requires that executive agencies have clear congressional authorization to exercise powers of vast economic and political significance. Section 301's forced-labor authority — which defines an "unreasonable" foreign practice as one that "permits any form of forced or compulsory labor" — has been applied by USTR to 60 economies simultaneously, affecting roughly 99% of U.S. import volume. The scope is arguably indistinguishable from the global tariff that IEEPA attempted to create, with a different statutory label.
Legal analysts at multiple law firms have already flagged that importers affected by any final Section 301 determination will have standing to challenge it before the Court of International Trade, and that recent litigation has brought "renewed attention to the scope of judicial review" available in trade cases. The Congressional Research Service noted that Section 301 actions by USTR — unlike presidential actions — are subject to Administrative Procedure Act review, making them potentially more legally exposed than prior tariff regimes.
The Treasury tariff revenue picture adds a fiscal dimension. The June revenue loss — reported at $25.6 billion for the month following the IEEPA ruling — underscores the administration's urgency in finalizing Section 301 before the Section 122 window closes. Tariff receipts help offset revenue lost to the 2025 tax cuts. Allowing a tariff gap to persist — even briefly — carries a fiscal cost the administration has been explicit about avoiding.
What Businesses Face in the Next 30 Days
The immediate planning horizon for importers is defined by three overlapping deadlines. First, Section 122 expires at 12:01 a.m. ET Friday, July 24. If Section 301 replacement duties are not finalized before that moment, there may be a brief window in which many goods enter at their standard most-favored-nation rates rather than any surcharge — a temporary reprieve that trade lawyers warn businesses not to assume will be meaningful. Second, the Section 301 forced-labor determination could be announced at any time and would take effect upon publication in the Federal Register. Third, Section 338 Canada tariffs take effect August 19.
For a company sourcing from Vietnam, the calculus is: the Section 122 surcharge may disappear Friday, while a 12.5% Section 301 forced-labor tariff — with no expiration date — is proposed in its place, and any entry timing decision must account for the possibility that the new rate is final before the old one lapses. For a company importing Canadian goods that qualify for USMCA preferential rates, the calculus is different again: the August 19 Section 338 effective date applies regardless of USMCA status.
Greer acknowledged to the Senate Finance Committee that the process is not "painless" but argued it is necessary. He did not specify a timeline for the Section 301 announcement. His CNBC appearance the previous morning had signaled imminent action without a date. In his Utah visit last week, the CEO of Traeger Grills described the trade policy whiplash as having turned the past year-and-a-half into a "nightmare for businesses."
Frequently Asked Questions
Will tariff rates actually go down when Section 122 expires Friday?
Temporarily and selectively. The 10% to 15% Section 122 surcharge on most imports will expire automatically at 12:01 a.m. ET on Friday, July 24, reducing the average effective U.S. tariff rate from approximately 13% to approximately 7.2% according to Capital Economics estimates. However, goods from the European Union are already on a separate 15% ceiling under the Turnberry Agreement. Goods from Brazil are now subject to a 25% Section 301 tariff. And the proposed Section 301 forced-labor duties — which would restore a 10% to 12.5% surcharge on 60 countries with no expiration date — could be announced and take effect before, during, or after the Friday transition. Importers should not assume Friday's expiration produces a lasting reduction in their landed costs.
Could Section 301 forced-labor tariffs be struck down the same way IEEPA tariffs were?
That is the central legal question the administration has not fully answered. The major questions doctrine, which the Supreme Court used in Learning Resources v. Trump to hold that IEEPA does not authorize tariffs, applies to executive agency actions as well as to presidential actions. USTR's use of Section 301 — a statute designed to address specific unfair foreign trade practices by specific trading partners — to impose a de facto global tariff on 60 countries representing 99% of U.S. import volume may qualify as a power of "vast economic and political significance" that requires clear congressional authorization. Legal analysts at multiple law firms have flagged this exposure, and importers affected by any final determination will have standing to challenge it before the Court of International Trade. A challenge would not be immediate, but the administrative and legal infrastructure for one is already being assembled.
What is Section 338 and why does it matter for importers from Canada?
Section 338 of the Tariff Act of 1930 — part of the Smoot-Hawley legislation — empowers the president to impose tariffs of up to 50% on any country whose trade practices discriminate against U.S. commerce. It had never been used until President Trump signed three proclamations invoking it against Canada on July 20, 2026. The 50% tariffs on Canadian alcohol, dairy, and a broad range of non-automotive goods take effect August 19. Critically, these tariffs apply even to goods that qualify for preferential treatment under USMCA — the trade agreement cannot shield importers from duties imposed under a separate statute that the USMCA implementing law does not explicitly override, as legal analysts have explained. Importers of Canadian goods should review their entry planning now, because the August 19 effective date provides limited time to adjust supply chains, bonding arrangements, or pricing contracts.
What is the real-world effect on businesses of the current tariff uncertainty?
The compounding uncertainty — overlapping statutes, pending litigation, announced but unfinalized duties — has produced what the CEO of Traeger Grills characterized to Greer directly during his Utah visit earlier this month as a "nightmare for businesses" in terms of planning. An importer cannot know today whether goods entering after Friday will face: (a) no surcharge at all, if Section 301 is not finalized and no other authority is invoked; (b) a 10% to 12.5% forced-labor tariff if Section 301 is announced in the next 48 hours; or (c) an entirely different rate if additional authorities are invoked. Three separate legal proceedings — the Federal Circuit appeal over Section 122, the anticipated Section 301 challenge, and the Section 338 Canada litigation that trade lawyers describe as "nearly guaranteed" — each carry the possibility of a retroactive refund comparable in scale to the $166 billion IEEPA refund pool that CBP is currently processing. Firms that paid tariffs later struck down are entitled to refunds, which means the financial stakes of entry timing decisions extend well beyond the moment of importation.
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