The US imposes new tariffs on 60 economies. Here’s what you need to know

• Following the expiration of the temporary Section 122 tariffs, the US government has transitioned to a more durable legal strategy by implementing Section 301 tariffs of 10% to 12.5% on imports from 60 economies over an alleged failure to enforce forced-labour bans.

• In separate trade actions, the administration is imposing a targeted 50% Section 338 tariff on roughly USD 20 billion of Canadian exports, levying a 25% Section 301 tariff on Brazil, and advancing a steep tariff phase-in on generic drugs that will reach 200% by August 2029.

• The overall macroeconomic impact remains insulated for now, as the effective statutory US tariff rate is projected to rise only modestly from 12.1% to 12.8%, consumer inflation in tariff-sensitive categories is decelerating, and major trading partners have not yet initiated concrete retaliatory measures.

• However, clear risks persist because the US Trade Representative has also launched Section 301 investigations into industrial overcapacity alongside ongoing national security reviews, which could trigger a broader, inflationary tit-for-tat trade escalation pushing tariff rates climb back toward 2025 levels.

• We should favour secular growth and high-quality businesses, particularly established technology companies with strong balance sheets, durable earnings and pricing power, while remaining cautious on consumer discretionary stocks. Regionally, we prefer Asian equities over the US, given their more attractive valuations and comparable earnings potential.

From IEEPA to Section 122 to Section 301

The Trump administration's tariff strategy has undergone another legal pivot. After the Supreme Court ruled in February that the "Liberation Day" tariffs unveiled on 2 April 2025 were unconstitutional, the White House turned to Section 122 of the Trade Act — a provision allowing the president to impose a balance-of-payments surcharge of up to 15% for a maximum of 150 days. That temporary fix has now expired.

In its place, the US government will impose tariffs ranging from 10% to 12.5% on imports from 60 economies over their alleged failure to effectively enforce bans on goods produced using forced labour. The US Trade Representative (USTR) argues that this failure disadvantages US producers by exposing them to unfair competition from forced-labour goods, both in export markets and domestically. The new tariffs rely on Section 301 of the Trade Act of 1974, which allows the US to impose tariffs following an investigation into foreign practices deemed to unfairly burden or restrict US commerce. This approach is viewed as considerably more durable than the International Emergency Economic Powers Act (IEEPA) basis struck down by the Supreme Court, as Section 301 grants the president broad authority to impose tariffs following a formal investigation. Critically, once imposed, these tariffs have no fixed expiration date and can be adjusted unilaterally by the president.

The tariffs generally fall into two categories. A 10% Section 301 tariff applies to economies that have some form of forced-labour import prohibition or have committed to implementing one, while a 12.5% tariff applies to economies that the USTR considers to have failed to impose adequate prohibitions. For most markets, these tariffs are added on top of existing Most-Favoured-Nation (MFN) tariffs, which are the standard tariff rates the US applies to imports from other World Trade Organization (WTO) members without a separate preferential trade agreement with the US.

However, the EU and Taiwan are subject to a 10% cap, while Japan, South Korea and Switzerland are subject to a 12.5% cap, with existing MFN tariffs taken into account. If the MFN tariff on a product already meets or exceeds the relevant cap, no additional Section 301 tariff is imposed. This means exporters from these five economies face less risk of tariff stacking than those from most other markets.

Table 1: Section 301 “Forced Labour” Tariffs

	Economies
10% tariffs	Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, European Union*, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Taiwan*, Trinidad and Tobago, United Kingdom
12.5% tariffs	Remaining 41 economies including China, Hong Kong, Japan*, Singapore, South Korea*, and Switzerland*
Source: The White House. Data as of 23 July 2026 *Net of MFN rate

There are also significant exemptions, including raw materials where tariffs could cause domestic shortages, products that could trigger economy-wide disruptions, goods that cannot be sufficiently sourced domestically or from alternative suppliers, and products where tariffs are unlikely to eliminate the targeted forced-labour practices. Exempted goods include semiconductors and semiconductor manufacturing equipment, as well as selected food, agricultural, energy and fertiliser products. Goods already subject to separate industry-specific tariffs, such as steel, aluminium, automobiles and certain drugs, are also excluded. Imports qualifying for preferential treatment under the US-Mexico-Canada Agreement (USMCA) are likewise exempt.

Separately, Canada faces a 50% tariff on certain goods from 19 August, imposed under Section 338 of the Tariff Act of 1930 over alleged discrimination against US commerce. The measure is notable because it can override USMCA protections for affected goods, although its scope is relatively limited compared with total US-Canada trade. The tariffs would cover roughly USD 20 billion of more than USD 380 billion in Canadian exports to the US, equivalent to around 5% of US imports from Canada.

Brazil is subject to a separate 25% Section 301 tariff following a US investigation into alleged unfair trade practices. Meanwhile, the administration is also pursuing tariffs on generic drugs, with a 100% tariff set to take effect in August 2028, rising to 200% in August 2029.

Impact of latest tariffs is limited, but risks remain

The latest Section 301 tariffs are unlikely to materially change the overall US tariff burden in the near term. As of 21 July, the Yale Budget Lab estimated that the average statutory US tariff rate stood at around 12.1% and would rise only modestly to 12.8% if the new Section 301 tariffs were implemented. On that basis, the overall tariff burden on US imports would remain close to current levels, largely because the new rates are similar in magnitude to the expiring 10% global tariff imposed under Section 122.

The impact on inflation also appears manageable, at least for now. Recent data suggest that much of the tariff-related pass-through into consumer goods prices has already occurred. June CPI data showed a deceleration across several tariff-sensitive categories, with price growth in household furnishings and supplies slowing to 1.3% from 2.4%, while apparel price growth eased to 3.9% from 4.8%. This points to a moderation in underlying goods inflationary pressures. Furthermore, persistent affordability concerns and elevated inflation are likely to constrain the Trump administration's ability to raise tariffs more aggressively ahead of the mid-term elections, given the risk of placing further pressure on household budgets.

The absence of retaliation from major trading partners also reduces the immediate risk to global growth. While governments including New Zealand and Australia have criticised the forced-labour rationale behind the new tariffs, no major trading partner has announced retaliatory measures specifically in response to the Section 301 tariffs. Canada has, however, threatened retaliation against the separate 50% tariffs on certain Canadian goods. Prime Minister Mark Carney has said Canada is weighing "all options" if no deal is reached before the 50% Section 338 tariffs take effect on 19 August, although he and Trump have also agreed to accelerate trade talks in the meantime. Similarly, while China has criticised the latest tariff measures, it has previously signalled that it could accept some increase in tariffs provided the US does not exceed the 20% ceiling discussed during negotiations in October 2025.

That said, the risk of higher tariffs has not disappeared. The USTR has opened a separate Section 301 investigation into alleged industrial overcapacity involving China and more than a dozen other economies, while ongoing Section 232 investigations could result in additional product- or sector-specific tariffs on national security grounds. If these measures are sufficiently broad to push effective tariff rates back towards 2025 levels, the impact on economic growth and inflation would become significantly harder to dismiss. The risk would be particularly pronounced if trading partners retaliate, triggering a broader tit-for-tat escalation that disrupts global trade and supply chains.

Beyond tariffs, several other factors we have discussed previously could keep inflation elevated. These include higher oil prices and refining costs, rising food prices, and continued AI-related capital spending, which could drive up prices for electronic goods.

Related article: US inflation slows, but the battle isn’t over yet

Favour secular growth and quality amid macroeconomic uncertainty

Against a backdrop of persistent trade and macroeconomic uncertainty, we believe investors should tilt portfolios towards structural growth themes that are less dependent on the economic cycle. We remain cautious on US consumer discretionary stocks, as elevated inflation and the prospect of higher borrowing costs if interest rates are raised later this year could continue to weigh on household spending.

We see greater opportunities in the digital economy sector, where the long-term adoption of AI and continued investment in computing infrastructure should provide structural support for earnings. However, we would be selective within the sector and avoid companies that remain loss-making and heavily reliant on external financing. These businesses are more vulnerable to higher interest rates, which can increase funding costs while putting pressure on their valuation multiples. Instead, we prefer established technology companies with strong balance sheets, pricing power and proven earnings generation, which should be better equipped to navigate a more challenging macro environment.

More broadly, we favour high-quality businesses with robust balance sheets, durable earnings and high returns on equity. These companies are typically better positioned to absorb higher input and financing costs while maintaining profitability, making them more resilient should inflation and interest rates remain elevated for longer than expected.

From a regional perspective, we continue to favour Asian equities over the US. Although US companies continue to deliver healthy earnings growth, we believe Asian markets offer similar earnings potential at considerably more attractive valuations. We therefore see a more compelling risk-reward profile in Asia, while maintaining an underweight position in US equities.

Table 2: Recommended products

Sector/Style	Recommended Products
Digital Economy	•       Fidelity Global Technology A-ACC-USD •       Eastspring Investments Unit Trusts - Global Technology SGD •       Invesco NASDAQ Internet ETF (NASDAQ: PNQI)
Quality	•       JPMorgan U.S. Quality Factor ETF (NYSE: JQUA)

Declaration:

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.