Section 301 at 12.5%: Recalculating Vietnam Landed Cost

How did the rate get to 12.5%?

The number itself is less important than the legal basis under it. Each change came from a different statute.

On February 20, 2026, the Supreme Court held that the emergency powers statute does not authorize tariffs. The administration replaced those duties with a 10% global surcharge under Section 122, which is limited to 150 days and expired on July 24.

On March 12, the US Trade Representative opened Section 301 investigations into 60 economies over their failure to prohibit, or to effectively enforce a prohibition on, imports made with forced labor. Final action was announced on July 23 and took effect the next day, at the moment the Section 122 surcharge lapsed.

Vietnam sits in the higher tier. Economies that have a forced labor import ban, or have committed to one, are at 10%. The rest, Vietnam and China among them, are at 12.5%.

What exactly applies to a Vietnamese product today?

For most goods, the calculation is simple: regular duty plus 12.5%.

It is additive. For Vietnam, the 12.5% is added to the most-favored-nation rate. That differs from the treatment of the European Union and Taiwan, where the combined rate is capped at 10%, and of Japan, South Korea, and Switzerland, where it is capped at 12.5%.

It stacks with trade remedies. Antidumping and countervailing duties apply in addition. Vietnamese hardwood plywood is the current example.

It does not stack with Section 232. Products already subject to Section 232 duties are excluded from the forced labor action. That covers steel, aluminum, and copper and their derivatives, automobiles and parts, and timber, lumber, and their derivatives. Upholstered wooden furniture and kitchen cabinets and vanities fall under the wood products action at 25% today.

Some goods are exempt. The final action exempts informational materials, donations, and personal baggage. Semiconductors and major information and communications technology products are currently exempt. USTR also granted economy-specific product exemptions, and said tariff-rate quotas for certain apparel would follow in a separate notice. Check the annexes for your HTS line rather than assuming.

Goods in transit had a short window. Shipments loaded before the effective time and entered by July 28, 2026 were not subject to the new duty.

What does that do to landed cost?

Take a hypothetical entered value of $50,000 and three product types. Rates other than the Section 301 and Section 232 figures are placeholders: use your own HTS classification.

Now compare the same duty-free line across the three regimes.

Two practical consequences follow.

A quote your supplier issued in the spring understated today's duty by 2.5 points. On thin-margin items, that is the margin.

The upholstered furniture line is scheduled to move again. The Section 232 rate on upholstered wooden products is set to rise from 25% to 30% on January 1, 2027, and the rate on kitchen cabinets and vanities from 25% to 50%. An order that ships in December and one that ships in January will not cost the same.

Remember that US duty is assessed on the entered value, which generally excludes international freight and insurance. Your landed cost model should apply the duty rate to the right base.

Does the 2.5-point gap change where you should source?

Seventeen economies are at 10%, including several that compete with Vietnam: Cambodia, Indonesia, Malaysia, Bangladesh, India, and Mexico.

On its own, a 2.5-point difference rarely justifies moving a program. Requalifying a factory, redoing samples, and absorbing a slower first production cost more than that in the first year. The gap matters at the margin, when you are already choosing between two qualified suppliers in different countries.

Against China, the comparison runs the other way. Chinese goods carry the same 12.5% forced labor duty, and it stacks with the earlier China-specific Section 301 duties and any trade remedy duties. For many categories, Vietnam's duty advantage over China remains substantial.

One thing has not changed: the incentive to mislabel origin. A Chinese product finished lightly in Vietnam is still a product of China. US Customs has been explicit about transshipment enforcement, and the penalties fall on the importer.

What could change next?

I would plan for movement, not stability. Four items are open at the time of verification.

Vietnam's tier. Vietnam issued Decree 292/2026 on July 22, 2026, banning imports of goods produced wholly or partly with forced labor, effective September 5, 2026. Vietnam's foreign ministry has said the US decision does not reflect the situation on the ground. USTR can modify its action. Whether Vietnam moves to the 10% tier is a decision for USTR, and I have found no announcement of one.

The intellectual property investigation. On May 29, 2026, USTR opened a separate Section 301 investigation into Vietnam's protection and enforcement of intellectual property. Written comments closed on July 2. Any resulting action could add to the forced labor duty. I have found no final action.

Litigation. Importers filed court challenges to the forced labor duties when they took effect. The earlier Section 122 surcharge was also challenged. Outcomes are uncertain, and refunds, where available, depend on how and when entries were protested. Ask your broker where your entries stand.

The Section 232 increases. The January 1, 2027 step-up on upholstered furniture and cabinets was already delayed once, from January 2026. It could be delayed again, or not.

How should you rebuild your numbers?

Work through the list below for each SKU. It takes a day for a typical catalog and prevents most surprises.

1. 1Confirm the HTS classification at ten digits, in writing, with your broker.
2. 2Identify the regime. Is the line under Section 232, exempt under an annex, or subject to the 12.5%?
3. 3Check for trade remedies. Search the product description against active antidumping and countervailing orders.
4. 4Recalculate duty on the entered value, not on the delivered price.
5. 5Stress-test two scenarios: Vietnam moved to 10%, and an additional duty layered on from the intellectual property case.
6. 6Review your contract terms. Who bears a duty change between order and entry? How long is a quoted price valid?
7. 7Document origin. Bill of materials, production records, and supplier declarations, kept with each entry.

Buyer checklist: classification confirmed; regime identified per SKU; trade remedy search done; duty base correct; two scenarios modeled; contract terms reviewed; origin file complete; broker briefed on open refund questions.

The information in this article was verified on October 11, 2026. It is not legal or customs advice. Tariff actions in 2026 have changed with little notice. Confirm the position with your customs broker before each entry.