10% or 12.5% on 99.4% of US Imports: Section 301 Tariffs Took Effect July 24, 2026 — and the August 1 Cliff Is Next. What It Means for the Dollar

The 24 July tariff cliff came and went, and the broad US tariff base did not fall off it. On 23 July 2026 USTR took final action in its 60 forced-labour Section 301 investigations, and the duties applied to goods entered from 12:01 a.m. Eastern time on 24 July — the same morning the temporary 10% Section 122 surcharge hit its 150-day statutory wall. The new rates are 10% for economies that ban or have committed to ban forced-labour imports and 12.5% for everyone else, across the top 60 US trade partners covering 99.4% of US imports. The dollar index sat near 101.3 on 24 July, close to a three-week high. And the bigger cliff — the 1 August country letters at 25%–35% — is still six days away.

This is the outcome this piece flagged as the durable successor when the question was still open, and it matters more for the shape of the shock than for its size. A 10-to-12.5% rate is not, on its own, a dramatic escalation from a 10% surcharge. What changed is the legal footing and the distribution: a temporary, court-contested, across-the-board levy with a hard sunset became a multi-year authority with a two-tier ladder that assigns different rates to different partners. For currency markets, that turns one global number into a map — and a map is something a factor-based read can price.

What actually happened on 24 July

Ambassador Jamieson Greer took final action, at the president's direction, in 60 parallel Section 301 investigations into trading partners' failure to prohibit and enforce against imports produced with forced labour. "President Trump recognizes that decades of moral suasion have not eradicated forced labor from global supply chains," Greer said in announcing the action. The official notice and rate structure are on the US Trade Representative's site, with the tiering set out in the accompanying USTR fact sheet.

The mechanics that matter for pricing the shock:

• Effective moment. Duties apply to goods entered for consumption on or after 12:01 a.m. ET, 24 July 2026. Goods loaded before that moment and entered before 28 July escape the additional duty.
• Scope. Most products across chapters 1–97 of the tariff schedule, from the top 60 US trade partners — 99.4% of US imports.
• Carve-outs. Goods entering free of duty under the USMCA are fully exempt, as are CAFTA-DR textile and apparel goods; articles already subject to Section 232 measures are excluded; and more than 2,100 tariff codes received exemptions, roughly 863 of them outright.
• Stacking. Where the duties bite, they layer on top of existing obligations — the pre-existing Section 301 tariffs on China and Brazil, anti-dumping and countervailing duties, and Section 232 tariffs — rather than replacing them.

Not every partner accepted the premise. New Zealand, moved from the broad 10% baseline to the top 12.5% tier, objected publicly: Prime Minister Christopher Luxon said "tariffs are not the way – they drive up costs and uncertainty for businesses," while Trade Minister Todd McClay argued "it's just not credible that imports created with forced labour play any measurable role in New Zealand's economy" (1News). Whatever the merits of the dispute, the market-relevant fact is the rate, and the rate is now set.

The rate ladder now ranks the majors

This is the substantive change for currency analysis. A single across-the-board surcharge applied one number to everyone, so it could not differentiate between currencies at all — it was a US-level shock and nothing more. The two-tier Section 301 structure assigns each of the eight majors its own position, and for the first time in this tariff cycle the ordering is legible.

Read that column carefully, because the ordering is not the one a trade-balance intuition would produce. The criterion is a legal one — whether an economy has a forced-labour import prohibition on the books — so the ladder tracks statute books rather than trade deficits. Canada, the most US-dependent economy in the group, lands at the exempt end. Australia and New Zealand, two of the least US-dependent, land at the top.

The ladder is not an exposure ladder

Here is where a headline-only read goes wrong, and where the fundamental channels do the work.

If the tariff rate were the whole story, the Aussie and the kiwi would be carrying the heaviest growth hit of the eight majors and the loonie the lightest. The trade data says close to the opposite. Australia sent A$23.8 billion of goods to the United States in 2024 — about 5% of its total goods exports, per the Australian Bureau of Statistics. New Zealand's US exports were NZ$9.0 billion, enough to make the United States its second-largest export destination, but still a minority of the total. Canada, by contrast, is overwhelmingly oriented toward the US market — and is the one major with an outright exemption on qualifying trade.

So the direct growth channel from this specific action is modest for AUD and NZD and near-zero for CAD. What actually moves the commodity dollars in a tariff episode is the second-order path: global risk sentiment, and Chinese demand. China sits in the flat 12.5% tier on top of its pre-existing Section 301 duties, and both the Aussie and the kiwi trade as liquid proxies for Chinese growth expectations. A tariff that barely touches Australia's own export book can still weigh on the Aussie by darkening the outlook for the economy that buys a third of it.

The loonie makes the point in reverse. Canada arguably got the best tariff news of any major on 24 July, and USD/CAD still sat near 1.41 — close to a one-year low for the Canadian dollar — because Canadian short rates remain roughly 125 to 150 basis points below US rates and the interest-rate factor is simply doing more work than the trade factor. Good tariff news does not lift a currency that is losing on carry. That decomposition is the whole argument for scoring factors separately; see the Canada GDP preview for how the growth leg of that same story reads into 31 July.

Three channels, not one

A tariff shock travels to the currency through at least three distinct fundamental channels, and they do not all point the same way.

The inflation-and-rates channel is the classic dollar-supportive one. Tariffs are a tax on imports; they tend to raise the prices of affected goods, which can lift near-term inflation. If that keeps the Federal Reserve higher-for-longer, the rate differential works in the dollar's favour. The mechanism runs through the policy response — the tariff itself does not strengthen the dollar; the Fed's reaction to the inflation it causes does. That is one reason the dollar index held near 101.3 into the weekend even as the United States taxed 99.4% of its own imports.

The growth-and-retaliation channel pulls the other way. Higher input costs squeeze US firms, uncertainty chills investment, and partners can respond with countermeasures that hit US exporters. A weaker growth outlook and a shallower expected rate path are dollar-negative. This channel is why an economy can tariff its way to a weaker currency when the growth damage outweighs the inflation lift.

The risk-sentiment channel is the wildcard. A disorderly trade shock triggers broad risk-off, and in a global scare the dollar is typically bid as the reserve and funding currency — even when the US is the source. That is the paradox of haven demand: bad US news can still be dollar-positive in the short run if it frightens everyone else more. See safe-haven currencies for how that ranking behaves under stress.

The three channels are why the same headline can lift the franc, weigh on the Aussie, and tug the dollar in two directions at once. A price chart of the dollar index shows you the blended residual. A meter that scores growth, interest rates and risk sentiment as separate factors — three of the five in the model — is built to tell you which channel is doing the work in each currency.

Still ahead: the August 1 letters

The Section 301 layer is now settled. The country letters are not, and they are the larger number by far.

The letters are explicitly escalatory — the Canada letter sets the rate to rise further "if Canada retaliates," and counter-tariffs from the EU or Mexico would be "added onto the 30%." So far that structure has deterred retaliation: the European Union chose to hold its countermeasures and negotiate, with Commission President Ursula von der Leyen warning a 30% tariff "would hurt businesses, consumers and patients on both sides of the Atlantic." Neutral coverage of the letters: Al Jazeera; the running average effective rate is tracked by the Tax Foundation.

Two branches are worth holding in mind — not as predictions, but as a map of how the factors would respond.

• Deals before the deadline. If partners trim the headline rate, the growth-and-retaliation channel eases and the affected currencies get relief. The dollar's haven bid fades on de-escalation, but its rate advantage persists, so any pullback tends to be shallow rather than a trend reversal.
• Rates take effect as written. If 1 August arrives with 25%–35% levies live, the inflation channel activates in earnest on top of the 10–12.5% base just imposed. That keeps the Fed's tolerance for cuts in question — dollar-supportive via rates — while the euro, loonie and yen absorb the growth hit through their own channels.

How the board was reset: the Supreme Court and the surcharge

The reason any of this required a new legal instrument traces to 20 February 2026, when the Supreme Court held 6-3, in an opinion by Chief Justice Roberts, that the International Emergency Economic Powers Act does not authorise the president to impose tariffs. IEEPA had been the backbone of the tariff programme, so the ruling voided a large share of the architecture at once — the full opinion is on the Supreme Court's site, with a neutral legal summary from the Congressional Research Service.

The stopgap was Section 122 of the Trade Act of 1974, a balance-of-payments provision allowing a temporary import surcharge of up to 15%. A 10% surcharge took effect 24 February 2026 and ran for the statutory ceiling of 150 days, which is precisely why 24 July was a hard date: the authority lapsed by operation of law regardless of the pending appeal, and extending it would have required an Act of Congress. The market lesson is that a tariff regime is only as durable as its legal authority — and the 24 July handover is the administration's answer to that fragility. That is the structural change the dollar now has to price, and it is more consequential than the 2.5 percentage points separating the two new tiers.

Why a fundamental read wins here

The 24 July action is a clean demonstration of the gap between a headline and a currency read. The headline was "tariffs on 60 economies, 99.4% of imports." The currency-relevant content was a ladder in which the most US-exposed major was exempted and the two least US-exposed majors were placed at the top rate — an ordering that inverts the intuitive growth story and routes most of the actual FX impact through the risk and commodity channels instead.

A price-only tool registers that the dollar firmed into the weekend near a three-week high. It cannot tell you whether that came from the inflation-and-rates channel, from a haven bid, or simply from the carry advantage that has been doing most of the work all quarter. Scoring interest rates, growth, risk sentiment, commodities and positioning as separate factors is what lets you attribute the move rather than describe it. For the wider context on why the dollar has confounded the 2026 bearish consensus, see the dollar's "winner takes it all" half, the AUD currency page for the top of the tariff ladder, and the methodology overview for how the model is built.

Educational macro context only — not investment advice.