Fashion’s tariff problem used to have a predictable direction of travel: get less exposed to China, source closer to home, and build greater resilience. The American government’s latest maneuvers have made that roadmap maddeningly harder to read, and in some cases, harder to follow.
Last month, the US Trade Representative (USTR) imposed 10% or 12.5% tariffs on imports from 60 economies, using Section 301 of the Trade Act of 1974 to target trading partners the administration believes have failed to impose or effectively enforce prohibitions on goods made with forced labor. The action replaced the temporary Section 122 tariffs that had allowed the federal government to continue collecting a 10% duty for 150 days, after the US Supreme Court struck down the administration’s earlier tariffs based on the International Emergency Economic Powers Act (IEEPA).
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Friday’s Supreme Court ruling struck down President Trump’s emergency tariffs, but within hours, the administration pivoted to new legal tools. For fashion, the mechanism has changed but the volatility hasn’t.
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That is only one piece of the new tariff architecture. Earlier in July, the USTR imposed a separate 25% tariff on certain goods from Brazil following a Section 301 investigation into digital trade, electronic payment services, preferential tariffs, anti-corruption enforcement, intellectual property, ethanol market access, and illegal deforestation.
On July 20, US President Donald Trump invoked Section 338 of the Tariff Act of 1930, imposing 50% tariffs on covered Canadian imports, effective August 19. The nearly century-old authority had never previously been used to impose tariffs, adding another layer of legal uncertainty to an already volatile trade environment; the White House added that the duties will apply regardless of whether goods qualify under the US-Mexico-Canada Agreement (USMCA). A further Section 301 investigation into structural excess capacity and production in manufacturing sectors, including 16 economies, remains pending.
For fashion, the result is not one tariff shock, but a rolling compliance and sourcing regime. Companies are being told to diversify away from China, source closer to home, strengthen forced labor compliance, and rebuild resilience. At the same time, the countries that might support those goals — Brazil, Canada, Mexico, Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) suppliers, Vietnam, India and others — are themselves exposed to new or threatened tariff action.
Julie Hughes, president of the United States Fashion Industry Association (USFIA), says most companies anticipated that the administration would use forced labor-related Section 301 tariffs to maintain 10% or 12.5% duties, after the temporary Section 122 tariffs expired. The issue, she says, is the cumulative effect of Brazil, Canada, and anticipated tariffs related to structural excess capacity. These duties would target countries the US believes are maintaining more manufacturing capacity than market demand can support, often through subsidies or other state-backed policies. The concern is that this excess production can spill into export markets at artificially low prices, undercutting US industries. “The onslaught of new tariffs increases the difficulty for companies to plan their business,” Hughes says.
Can Section 301 tariffs stick?
Section 301 is a more familiar and potentially more battle-tested trade tool than some of the authorities the administration has previously wielded. It allows the US to respond to foreign acts, policies, or practices deemed unreasonable or discriminatory and burdensome to US commerce. But trade lawyers say the forced labor action could still face legal scrutiny, because Section 301 remedies are generally expected to be tied to specific findings and injuries.
The Trump administration may be on stronger footing with the use of Section 301 than with IEEPA, because Section 301 is an established tariff tool with a formal review process, including public notice of proposed duties and an opportunity to submit comments and rebuttals, says Angela Santos, partner at Arentfox Schiff. Still, she sees potential vulnerability in the breadth and speed of the forced labor investigations. Under Section 301, USTR is required to make economy-specific findings and calibrate the remedy to the burden or the restriction that the economy is placing on US commerce, Santos says. That could become a vulnerability for the forced labor tariffs; the administration conducted a simultaneous review across 60 economies and imposed broadly similar tariff rates, raising questions about how individualized the analysis was.
