New US tariff threat clouds sourcing plans ahead of peak season

US importers, still digesting a February Supreme Court decision that overturned billions of dollars in previously paid tariffs, are now facing a new wave of trade uncertainty that could complicate sourcing strategies and raise costs ahead of the peak shipping season.

The latest pressure comes from the Office of the US Trade Representative (USTR), which last week launched two separate Section 301 investigations covering a combined total of 60 countries and economies.

One probe focuses on what Washington describes as structural excess capacity and manufacturing overproduction, while the second targets forced labor practices. Trade specialists widely expect both cases to lead to new tariffs, potentially increasing both direct import costs and customs administration burdens for US companies.

For importers, the timing is particularly sensitive. Any additional tariffs could start taking effect just as US retailers begin peak season ordering for the winter holidays, potentially affecting sourcing decisions and freight flows during one of the busiest periods of the year.

Recent data already shows that US importers have been shifting some sourcing away from China. According to PIERS, Vietnam’s share of inbound US container volumes rose to 12% in 2025, up from 9.9% in 2024, while mainland China’s share fell from 40.4% to 36% over the same period.

The Trump administration’s latest move is being seen as a strategic pivot away from tariffs imposed under the International Emergency Economic Powers Act (IEEPA) and toward trade mechanisms seen as more legally defensible.

On 20 February, the US Supreme Court ruled that the IEEPA tariffs had been levied illegally. The US Court of International Trade has since instructed Customs and Border Protection to develop a process to refund importers more than $160 billion in tariffs, plus interest.

Trade experts had expected the administration to move quickly toward other instruments if the IEEPA tariffs were struck down, and Section 301 now appears to be the preferred path.

The structural capacity investigation covers 16 countries or trading blocs, including China, India, Vietnam, Indonesia and the European Union, and will examine whether their industrial or policy practices burden or restrict US commerce.

The broader forced labor investigation extends far further, covering virtually all major US trading partners. Observers see it as an attempt to recreate, through a more durable legal mechanism, the broad scope of Trump’s earlier “Liberation Day” tariffs, many of which were later invalidated.

In the meantime, the administration has used Section 122 of the Trade Act to apply temporary 10% tariffs on most US imports, except for goods protected under existing trade agreements.

The speed of the new investigations also suggests that Washington wants at least the threat of new duties in place before the temporary Section 122 tariffs expire on 27 July.

Comments on both investigations are due by 15 April, with hearings scheduled for 28 April for the forced labor case and 5 May for the structural capacity probe.

The USTR has also requested consultations with every government named in the investigations. Since all economies listed in the structural capacity case are also included in the forced labor inquiry, the office is expected to engage with 60 separate entities over the coming months, likely using tariff threats as negotiating leverage.

According to Deborah Elms, head of trade policy at the Singapore-based Hinrich Foundation, the administration’s use of Section 301 in this way departs from the original purpose of the law, which was intended to push countries into removing barriers to US exports rather than serve as a broad retaliatory tool.

That distinction matters for importers. Unlike tariffs imposed under IEEPA or Section 122, Section 301 measures are generally considered more durable and legally resilient, making them harder to reverse and more difficult for importers to work around.

During Trump’s first term, Section 301 duties of 25% on Chinese goods survived multiple changes in the political landscape and remain in place today. The potential scope of the new investigations could go far beyond that earlier round, although the USTR has not yet indicated what tariff levels might eventually result.

For importers, the challenge is no longer just uncertainty around China. If the new cases lead to wide-ranging duties across alternative sourcing markets, the flexibility many companies built into their supply chains over the past few years could narrow significantly.

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