The Trump administration’s new tariff system, which took effect Friday, divides the world into three tiers. Here is which countries fall where and why.
The system replaces a temporary 10 percent global tariff that expired this week. The new duties are imposed under Section 301 of the Trade Act of 1974, based on investigations into whether US trading partners are adequately enforcing bans on goods produced by forced labor.
Sixty economies were investigated. The results are not uniform.
Tier 1, 10 percent
Seventeen countries qualify for the lowest rate because the USTR determined they have either imposed their own forced-labor import prohibition, committed to enact one through a bilateral trade agreement, or implemented a partial regime with meaningful enforcement.
They include: Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom.
The inclusion of Canada and Mexico is notable, both are US neighbors and top trading partners under the USMCA. India and the UK are also significant trade relationships. These 17 countries collectively account for a large share of US imports, and their 10 percent rate is the price of being judged sufficiently cooperative on labor enforcement.
Tier 2, 10 or 12.5 percent (selective)
The European Union, Taiwan, Japan, South Korea, and Switzerland face a more complex structure. Certain products from these economies are tariffed at 10 percent, while others face 12.5 percent. The USTR has not published a complete product-level breakdown, but the dual rate appears designed to penalize specific industries within these economies rather than applying a blanket rate.
The EU and Japan are the United States’ largest trading partners after China and Mexico. South Korea is a major steel and electronics exporter. These economies have advanced labor enforcement systems, but the administration determined their efforts remain insufficient.
Tier 3, 12.5 percent
All other investigated economies face the highest rate. This category includes China, Vietnam, Brazil, Thailand, Turkey, South Africa, Nigeria, and most of Southeast Asia, Africa, and Latin America. No partial credit was given for partial compliance.
China is the obvious target, the world’s second-largest economy and the country the administration has most aggressively pursued on trade. Vietnam and Brazil are major manufacturing and agricultural exporters. The 12.5 percent tier covers most of the developing world.
The USTR’s fact sheet, published alongside the tariff announcement, includes narrow product exemptions. Raw materials that cannot be sourced domestically are excluded, as are goods whose tariffing would cause economy-wide disruptions. Selected products from Argentina, Bangladesh, Cambodia, the EU, Indonesia, Jordan, Malaysia, Switzerland, Taiwan, and the UK also received exemptions, described by the administration as incentives for those economies to maintain or improve their enforcement commitments.
The 60 economies covered by the tariffs account for roughly 99 percent of all US imports. In practice, nearly every foreign-made product entering the United States will carry a new tax of 10 to 12.5 percent.
The question the market is now asking is whether this graduated system will hold. Countries in Tier 1 can maintain their 10 percent rate by staying compliant. Countries in Tier 2 can reduce their rate on certain products by improving enforcement. Countries in Tier 3 have the furthest to climb, and the most to lose by staying where they are.