USTR Proposes New Section 301 Tariff Matrix Targeting 60 Trading Partners with 10-12.5% Rates

The Analysis

On 2 June 2026 the Office of the United States Trade Representative put a proposed tariff matrix on the table, and the first thing to be precise about is that it is a proposal and not a rule in force. As drafted, it sets a baseline 10% rate on a core group of fifteen trading partners and a higher 12.5% rate on forty-five others, with Hong Kong placed in the higher group. The stated grounds are specific investigations, forced-labour enforcement and state-subsidised industrial overcapacity, rather than a general economic emergency.

Two dates do more work than the headline rate. The public comment window closes on 6 July 2026. Hearings begin on 7 July 2026. Everything before that window closes is a proposal that can move, and what is said in that window is what the eventual record will be built on. I would not build a budget on either side of those dates until I could say which side of the line a given number sits on.

The applicable premise here is not the rate. It is the legal footing underneath it. In February 2026 the Supreme Court struck down the global tariffs that had been imposed under the International Emergency Economic Powers Act, and the temporary 10% global surcharge under Section 122 is set to lapse in July 2026. This package is therefore not an escalation of a standing regime. It is an attempt to stand the same ground back up on a firmer foundation, Section 301, which rests on formal investigations rather than emergency powers. Strictly speaking, that changes what an importer should be doing, because it changes which parts of the instrument are stable and which are not.

Start with the chain that produced the proposal, because the applicability premise sits above the rate and not inside it. The February 2026 ruling removed the broad emergency instrument. A tariff structure built on emergency powers behaves differently from one built on completed investigations. The first can be applied and adjusted quickly and across the board. The second has to be anchored to findings about particular conduct and particular partners, and it has to survive the procedural steps that findings require. Section 301 is of the second kind. That is precisely why it was chosen to replace the lapsed surcharge, and it is also why the resulting matrix is granular rather than flat. The practical consequence for an importer is that the question of what the new tariff is has no single answer. There is a rate per partner, a rate tier per partner, and, because investigations produce carve-outs, a set of product exclusions sitting underneath both. Read the instrument as a flat rate and you will misread it.

The two-tier design is the second thing to hold steady. Fifteen partners sit at a baseline of 10%. Forty-five others sit at 12.5%, and Hong Kong is reported among the higher tier. What sorts a shipment between those tiers is not its product line and not its margin. It is the trading partner to which the goods are attributed. That is a question of origin before it is a question of cost. Origin is decided on evidence, on documentation, on the route the goods actually travelled and the place they were substantially transformed, not on the address of the buyer or the currency of the invoice. So the honest first question is narrower than it sounds. Which partner would my shipment be attributed to, and could I produce the documents that establish it if the attribution were tested.

Here is an exception that most summaries drop, and it is the one I would underline. The proposal's annex reportedly carries targeted exemptions for certain agricultural products, for critical minerals, and for critical industrial components. Where an exemption applies, the headline rates are not the rate that reaches you. A 12.5% line and an exemption are not two ways of describing the same shipment. They are different outcomes that turn on classification, and classification is resolved product by product and line by line. Before any arithmetic about cost, the prior question is whether the goods fall inside a carve-out and on what basis that would be established. I have watched importers spend a quarter modelling a rate that never applied to them because they modelled the frame and not the annex.

When I say proposed, I mean it in the ordinary sense of the word. The rates are not settled, the partner list is not settled, and the annex is not settled. The consultations that follow the comment window can move all three. An importer who builds next year's budget on a proposal is building on a document that has not been signed. I am not being cautious for the sake of caution. I am pointing at the specific place where a number that looks like a fact is actually a position, and a position is something that can be argued out of existence between June and the fall.

The metals change is a separate instrument and it deserves to be read separately, because it is built on a different logic. A proclamation issued on 1 June 2026 adjusted the Section 232 duties on aluminium, copper and steel derivatives. The headline punitive rate reaches 50%. Reduced preferential treatment is reported to apply where domestic origin can be verified at a high share, on the order of 85% of steel melted and poured in the United States, or 85% of aluminium or copper smelted and cast domestically. Strictly speaking, this is not primarily a rate rule. It is an evidentiary rule wearing the clothes of a rate rule.

That distinction has consequences for anyone who treats origin as a box to be ticked at the end of a transaction. If the metal inside a derivative cannot be documented back through the sub-tier suppliers to where it was melted and poured, or smelted and cast, the lower line is not available, not because the metal is the wrong metal but because it cannot be shown to be the right one. That is a boundary condition, and it is the kind that is cheap to satisfy before a shipment and expensive to reconstruct after a question has been asked. On the facts as reported, traceability of metal origin across sub-tiers is not a filing formality. It is the thing that decides which of two very different rates applies, and it is a condition of entitlement rather than a matter of good practice.

There is a third piece, smaller today and larger later. On the same day, the USTR sought comment on a new US-China trade mechanism previewed at the May 2026 summit, aimed at identifying non-sensitive categories of goods that could be eligible for reciprocal tariff modifications and managed quotas. It is at the consultation stage. I would log it and watch it closely through the comment docket, and I would not plan sourcing around it, because a consultation is an intention and not a provision. Intentions have a way of becoming provisions, which is exactly why the file is worth keeping, but they are not provisions yet.

Two things are missing from most of the coverage, and they are the two that matter to a compliance file. The first is the annex. A headline of sixty partners at ten to twelve and a half per cent describes the outer frame and not the interior. The interior is exemption-driven and product-specific, and it is where the actual answer lives for most companies. The second is the status of the whole package. Nothing in it binds until it is finalised. Both omissions push readers toward the same two mistakes: treating a proposal as an applied rate, and treating a rate as if it applied to everything. I have seen both mistakes made in the same memo, which is a special kind of efficiency.

There is a further boundary worth stating plainly, because it is where most of the confusion enters. A partner-level rate is not a product-level rate. The tiers are drawn around trading partners, but the duty that lands on a bill is computed against goods, classified, valued and attributed under rules that operate below the tier. So an importer can be right about the tier and wrong about the exposure, or wrong about the tier and right about the exposure, depending on the annex. The two layers have to be kept separate in the analysis even though they will be combined in the outcome. Conflating them is how a clean legal instrument turns into a messy forecast.

Assume, for the sake of a calculation and nothing more, an importer that brings in eight million US dollars of goods a year that fall inside the covered scope and are attributed to a partner placed in the higher tier, with no exemption applying. The spread between a 10% line and a 12.5% line is two and a half percentage points, so the difference in duty on that base is two hundred thousand dollars a year, or about sixteen thousand seven hundred dollars a month. That is the cost of being in the wrong tier on those assumptions, and the assumptions are doing all of the work: the tier turns on partner attribution, an exemption may erase the line entirely, and none of it is final. Change any one of those and the number changes with it.

If the same importer also carries one million dollars a year of value inside the Section 232 derivatives scope and cannot substantiate the domestic-origin test, the punitive line of 50% applies to the metals duty base, and the exposure on that slice is five hundred thousand dollars a year against whatever a preferential line would yield. I am deliberately not attaching a figure to the preferential line, because on the facts I can verify, the proposal reports a threshold and a direction and not a settled preferential rate. Inventing one would be precisely the error I am asking you to avoid. Where the source gives you an 85% verification threshold and no published preferential figure, the honest output is a conditional statement, not a decimal.

So the conclusion holds only under conditions, and I would rather name them than pretend they always hold. It fails when an annex exemption covers the product line, because then the tier is beside the point. It fails when the goods are attributed to a partner outside the covered group, because then the matrix does not reach the shipment at all. It fails when the final determination changes the rate or the partner list after the comment window, because then the analysed number was never the operative one. It also fails when the metal-origin evidence is complete enough to move a derivative off the punitive line. Four conditions, any one of which can flip the answer. That is not a reason to avoid the analysis. It is the reason to date every number and label it.

What to do about it, then, and by when. The comment window is the one lever an importer actually holds, and it closes on 6 July 2026, with hearings opening on 7 July 2026. Anything a company wants on the record has to be in before that window shuts, and it has to name goods and classification rather than sentiment. Between now and then, a compliance team can build the register that maps each imported product line to a proposed tier and to the exemption annex, so that no budget figure rests on the headline. That is the work that carries, and it is the work that can be finished before the rates are known, because it is about the company's own goods and not about the agency's decision.

The alternative to doing that work is guessing, and guessing has a known cost. The most common pitfall is reading the frame rate as the applied rate and building a budget on it, which is expensive twice, once when the exemption is discovered and once when the rate changes. The second is reconstructing metal origin late, after a customs question, when sub-tier paperwork has already gone cold. The third is confusing a legal instrument with a commercial instruction. Strictly speaking, this is a compliance question and not a commercial one. Whether to move a sourcing base, and where to, is a commercial decision that depends on facts I do not have and judgement that is not mine to make. What I can tell you is the boundary: what the rule would attach to, on what evidence, and what would have to be true for it not to attach at all.

Let me put the point about layers one more way, because it is the one that gets lost when a circular goes out under a headline number. A tariff matrix keyed to sixty partners looks, from a distance, like a single decision applied to a single world. Up close it is a stack of separate determinations. There is the question of whether the goods fall within the scope of the investigation at all. There is the question of which partner the goods are attributed to, and whether the evidence behind that attribution would hold if it were challenged. There is the question of whether an annex exemption removes the goods from the schedule. And there is the separate, parallel question of whether the metals inside those goods attract their own duty under a different statute, with its own threshold and its own evidentiary test.

Four determinations, four different kinds of evidence, and one line on an invoice. The discipline this calls for is not cleverness. It is the willingness to keep the questions apart, which is duller than it sounds and rarer than it should be, and which is the only defence against being surprised twice by a single shipment. A rate you can quote and a rule you can rely on are not the same thing, and only one of them survives contact with a hearing room.

I work on a quarter-to-year horizon, and this instrument has to be read on that horizon rather than on the news cycle. A comment window and a hearing are not administrative decoration. They are the moments when a proposal can still be shaped, and the moment when a position can still be argued into or out of the final text. If your goods are in scope and your partner sits in a particular tier, the next few weeks are the last point at which the outcome is genuinely open. After the determination is signed, the same facts that would have been persuasive in June become merely grounds for a refund claim, which is a far more expensive way to be right.

The impact is uneven, and it is worth being honest about the shape of that unevenness. A large importer with a dedicated compliance function can absorb a two and a half point swing in the ad valorem line, and can build the metal-origin file almost as a matter of routine. A smaller importer with one product line and no in-house counsel carries the same rate but far less capacity to claim the exemption that would neutralise it, which means the same headline lands hardest on the party least able to argue about it. That is not an observation about fairness. It is a description of where the compliance burden actually sits, and it is the reason I ask about evidence before I ask about rates.

There is one more boundary a careful reader should hold open. Because this structure was rebuilt specifically to address the legal gap left by the February 2026 ruling, it is a structure whose form is still in motion. The instrument that reaches you in the autumn may not be the instrument described in June, not because the policy changed its mind, but because the legal footing is still being tested. An importer who tracks only the rate will miss the more important variable, which is the shape of the rule itself. Watch the form as closely as the number, because the form is what decides whether the number applies to you.

That is where I would leave it, with the boundary rather than the conclusion. If the goods are outside the covered scope, none of this attaches. If they are attributed to a partner outside the covered group, the matrix is silent as to them. If an exemption in the annex reaches them, the tiers are not the operative numbers. And if none of those holds, then the exposure is real, conditional, and still un-final. Do not conclude before the record closes on 6 July, and do not conclude after it either, until the determination is signed. The provision that governs your next twelve months is the one that will be published, not the one that was proposed, and the distance between those two documents is exactly the distance between a position and a rule.

↑ Back to the key points

— By Dr. Ingrid Voss