The United States is on the verge of its most sweeping tariff transition since the opening months of the Trump administration, with a temporary 10% global import duty — imposed under Section 122 of the US Trade Act of 1974 — set to expire at the end of Friday, and a new round of duties under Section 301 of the same law poised to replace it. US Trade Representative Jamieson Greer, testifying before the Senate Finance Committee on Wednesday, confirmed the administration's intentions without specifying an exact rollout date, telling lawmakers: "We expect to see some action soon."
The incoming Section 301 tariffs differ from the expiring measure in both legal authority and scope. Section 122 allows the president to impose tariffs of up to 10% for 150 days without congressional authorization, a tool the administration deployed in February after the Supreme Court struck down its broader use of the International Emergency Economic Powers Act. Section 301 tariffs, by contrast, can be applied indefinitely but require a formal trade investigation finding of unfair trade practices. The administration's stated justification for the new round is that 60 trading partners import goods made with forced labor and fail to enforce their own labor laws sufficiently to satisfy US standards.
The 60 economies in scope of the ongoing Section 301 investigation include virtually every major US trading partner: China, the European Union, Japan, South Korea, Taiwan, Vietnam, Mexico, India, Indonesia, Malaysia, Thailand, Singapore, Switzerland, Norway, Bangladesh, and Cambodia, among others. Greer told CNBC that the new tariff structure would cover "about 99% of our trade," and analysts familiar with the investigation expect rates to range from 10% to 12.5%, potentially higher for countries facing additional country-specific penalties from separate ongoing trade actions.
The timing compounds existing uncertainty for US importers and multinational companies that have been navigating the on-again, off-again tariff environment since January 2025. Brazil already faces new 25% Section 301 tariffs that took effect Wednesday. Canada faces a separate 50% tariff on certain goods with no CUSMA exemptions taking effect August 19. Greer told a senator who pressed on the Canada situation that overall tariffs on China remain "by far" higher than those on Canada, but acknowledged that certain specific Canadian tariff lines will exceed equivalent rates on Chinese goods once the new measures stack.
For equity markets, the immediate read-through touches a wide range of sectors. Technology hardware companies with supply chains anchored in Taiwan, Vietnam, and South Korea — including consumer electronics, semiconductor equipment, and server hardware manufacturers — face the most direct exposure. Retailers with apparel and footwear production concentrated in Bangladesh, Cambodia, and Vietnam are similarly at risk. The auto sector, with complex cross-border supply chains involving Mexico, Canada, Japan, and South Korea, faces potential cost increases across multiple input categories simultaneously.
Consumer discretionary ETFs and names with high import exposure have historically underperformed during tariff escalation periods, while domestically focused industrials and companies benefiting from reshoring investment have tended to outperform. The tariff announcement, if confirmed before Friday's close, would land in the middle of the heaviest week of second-quarter earnings, adding a macro overlay to an already news-saturated trading environment.
Markets will be watching for formal announcement language from the White House later Thursday or early Friday, with the specific rates, product exclusion lists, and effective dates for each of the 60 countries serving as the critical variables that equity traders need to assess sector exposure.