The United States has imposed a 12.5 percent Section 301 tariff on imports from Vietnam following its investigation into forced labour import prohibitions. While selected products are exempt, the new measures introduce additional trade compliance considerations for Vietnamese exporters and manufacturers serving the US market.
On 24 July 2026, the Office of the United States Trade Representative (USTR) announced new Section 301 tariff measures targeting imports from 60 trading economies, including Vietnam, following investigations into their enforcement of prohibitions on goods produced with forced labour.
Under the measures, most imports from Vietnam will be subject to an additional 12.5 percent tariff, although certain products are exempt. The tariffs took effect as the temporary 10 percent global tariff expired, marking a shift towards country-specific trade restrictions after the US Supreme Court’s February ruling invalidated the President’s earlier “reciprocal” tariff regime.
See also: US Designates Vietnam a Priority Foreign Country on IP
Assess Tariff Exposure
Our advisors help exporters evaluate Section 301 duties, product exemptions, customs classifications, and supply chain risks.What happened?
The measures stem from a Section 301 investigation launched in March 2026, which concluded that Vietnam had not sufficiently enacted or enforced restrictions on imports linked to forced labour. Later, on 2 June 2026, USTR released the findings of 60 separate Section 301 investigations launched in March 2026. The investigations examined whether major US trading partners have adopted and effectively enforced measures preventing the importation of goods produced with forced labor.
According to USTR, the failure of trading partners to restrict forced labor-related imports creates an “unlevel playing field” for US workers and businesses by allowing products made with artificially lower labor costs to enter global supply chains. Vietnam was included alongside economies such as China, India, Japan, South Korea, Thailand, Malaysia, the European Union, Canada, Mexico, and the United Kingdom.
Businesses exporting to the US should therefore reassess supply chain traceability, supplier due diligence, and trade compliance processes to mitigate potential tariff exposure.
More broadly, the latest action establishes a country-by-country enforcement framework rather than a uniform tariff regime, with duty rates, product coverage, and available exemptions differing across the affected trading partners.
Understanding Section 301
Section 301 of the US Trade Act of 1974 authorizes USTR to investigate foreign government acts, policies, or practices that are considered unreasonable, discriminatory, or burdensome to US commerce.
Where a violation is found, the US government may impose responsive measures, including additional tariffs or other trade restrictions. Section 301 has previously served as the legal basis for tariffs imposed on Chinese imports during the US-China trade dispute.
Why is Vietnam included?
The investigation focuses on whether countries maintain and effectively enforce restrictions on imports made with forced labor.
USTR argues that many economies, including Vietnam, either lack comprehensive prohibitions or do not effectively enforce existing measures against forced labor-linked imports. The agency concluded that these shortcomings may allow goods produced through forced labor to enter international supply chains and compete unfairly with U.S. products.
The determination does not accuse Vietnam of systematically using forced labor. Rather, it assesses Vietnam’s regulatory approach to preventing the importation of goods produced with forced labor from third countries.
Vietnam subject to a 12.5 percent tariff
Under the USTR determination, imports from Vietnam will be subject to a 12.5 percent Section 301 tariff, except for products specifically excluded under Annex I and Annex II, Part A of the notice.
According to the USTR, the tariff rate and the scope of the product exemptions were determined to be appropriate for addressing the actionable acts, policies, and practices identified during the Vietnam investigation.
Product exemptions apply
The Section 301 tariffs do not apply universally. The USTR has exempted selected products where tariffs could:
- Disrupt US supply chains or domestic production;
- Cause broader economic disruption;
- Apply to products that cannot be sourced in sufficient quantities from the United States or alternative suppliers;
- Be ineffective in achieving the objectives of the investigation; or
- Support trading partners’ commitments to strengthen forced labour import prohibitions.
The excluded products are listed in Annex I and Annex II of the USTR notice and will be reflected in updates to the Harmonized Tariff Schedule of the United States (HTSUS).
Foreign trade zone rules tightened
The notice also changes the treatment of affected imports entering US Foreign Trade Zones (FTZs).
Products subject to the additional Section 301 tariff must generally be admitted under “privileged foreign status”, except for goods eligible for “domestic status” under US customs regulations. This means the tariff classification and applicable duty rate are fixed when the goods enter the FTZ and generally cannot be altered through processing or manufacturing activities within the zone.
For businesses using FTZs as part of their US distribution or manufacturing strategy, the provision limits opportunities to mitigate the additional tariff through customs procedures.
Tariff measures apply independently to each economy
The USTR also clarified that each of the 60 Section 301 investigations is legally separate.
As a result:
- Tariffs imposed on Vietnam apply independently of measures affecting other economies;
- Product exemptions granted to one economy do not automatically extend to another; and
- Any successful legal challenge against the tariff measures for one country would not automatically invalidate the tariffs or exemptions applicable to Vietnam.
The notice includes a severability provision intended to ensure that if a court invalidates one tariff measure or exemption, the remaining tariff actions continue to apply unless separately overturned.
Manage US Trade Compliance Risks
As US scrutiny of supply chains intensifies, businesses should proactively assess their exposure to tariffs, forced labor compliance requirements, and sourcing risks.
Dezan Shira & Associates’ Supply Chain and Tariff Advisory Services can assist with:
- Tariff exposure assessments;
- Supply chain and sourcing reviews;
- Country-of-origin analysis; and
- Trade compliance and market access planning.
Textile tariff-rate quota mechanism excludes Vietnam
Alongside the Section 301 tariff rate proposal, the USTR previously also proposed a special mechanism for textile and apparel imports. Under this proposal, a designated volume of textile and apparel products could qualify for a reduced Section 301 tariff rate based on the importing country’s purchases of US-origin textile inputs, including cotton and man-made fibers.
According to the latest notice, the Presidential Memorandum directs the USTR to establish a three-year tariff-rate quota (TRQ) programme for textile and apparel imports from Bangladesh, Cambodia, Indonesia, and Malaysia once implementation is determined to be feasible. Vietnam is not included in this mechanism.
Under the TRQs, a specified volume of textile and apparel exports from these four economies will be eligible to enter the United States free of the new Section 301 tariffs, provided they meet sourcing thresholds for US-origin textile goods or cotton. The mechanism is intended to encourage greater use of US-made inputs while reducing reliance on supply chains considered more likely to involve forced labour.
Until the TRQs are established and take effect, the relevant textile and apparel imports from Bangladesh, Cambodia, Indonesia, and Malaysia will remain subject to the applicable Section 301 tariffs. The USTR will publish a separate Federal Register notice once the TRQs and their effective dates are finalised.
As Vietnam is not covered by the TRQ programme, its textile and apparel exports will remain subject to the standard Section 301 tariff measures, except where product-specific exclusions apply. If implemented, the TRQs could improve the competitive position of the four participating economies relative to Vietnamese exporters in the US market.
Business implications for Vietnam exporters
The announcement establishes 12.5 percent as the default additional Section 301 tariff for Vietnamese exports to the United States, unless a product qualifies for an exemption.
Vietnamese exporters and multinational manufacturers should therefore review:
- Whether exported products are covered by the exemption lists in Annex I or Annex II;
- The applicable HTSUS classification for each product;
- The impact of the additional tariff on pricing, contracts, and supply chains;
- Whether products imported through US Foreign Trade Zones remain commercially viable under the new customs treatment; and
- Potential adjustments to sourcing, production, or distribution strategies.
Because the measures combine country-specific tariffs with product-level exemptions, businesses should assess tariff exposure on a product-by-product basis rather than assuming the 12.5 percent duty applies uniformly across all exports.
Outlook
The latest Section 301 action signals a more targeted US trade enforcement approach, combining country-specific tariff measures with tailored product exclusions. For Vietnam-based exporters, compliance will increasingly depend not only on country of origin but also on product classification, exemption eligibility, and customs planning.
Companies exporting to the US should monitor future amendments to the HTSUS and any updates to the exemption lists, while reviewing supply chain strategies to manage the potential commercial impact of the new tariff regime.
See also: US Supreme Court Blocks Trump’s Tariffs: Implications for Vietnam–US Trade and Businesses
Key takeaways
- The US has imposed a 12.5 percent Section 301 tariff on imports from Vietnam, following its investigation into Vietnam’s enforcement of forced labour import prohibitions.
- The tariff does not apply to all products. Selected goods are exempt under Annex I and Annex II based on supply chain, economic, and policy considerations.
- Affected products entering US Foreign Trade Zones must generally be admitted under “privileged foreign status,” limiting opportunities to mitigate tariffs through FTZ processing.
This article was first published on June 4, 2026, and was last updated on July 26, 2026.
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