Section 122 Lapses, a New Section 301 Duty Fills the Gap

US hits Brazil with a 25% tariff, most goods have no grace period.

The tariff took effect July 22 under Section 301 of the Trade Act of 1974, after a yearlong investigation. USTR's exemption list covers raw materials like coffee, beef and petroleum, roughly 430 aircraft-parts HTS lines, and goods already under Section 232 metals. Ethanol is not exempt and takes the full 25%. Why it matters: if you buy or sell Brazilian goods, check the exemption annex first. Source: USTR, ustr.gov/about/policy-offices/press-office/press-releases/2026/july/american-farmers-loggers-and-industry-leaders-applaud-president-trumps-bold-tariff-action-regarding (2026-07-19)

Section 122 tariff lapsed July 24, but a new Section 301 duty replaced it the same minute.

Section 122 hit its 150-day statutory cap and expired at 12:01 a.m. EDT July 24. Analysts had estimated the average US tariff rate would fall from roughly 13% to roughly 7% if nothing replaced it. Nothing waited: a new Section 301 forced-labor tariff, 10% for 17 partners with a forced-labor import ban already in place, 12.5% for the rest including Taiwan and the EU, hit 60 trading partners at the same moment. Why it matters: your landed cost depends on whether your country of origin is one of the 60 now under the new duty, not the headline rate drop. Source: IndustrialSage, www.industrialsage.com/section-122-tariff-expires-july-2026/ (2026-07-15)

Pharma tariffs go live July 31 for 17 named companies, everyone else has until September 29.

A 100% tariff under Section 232 applies to patented pharmaceuticals listed in the FDA's Orange or Purple Book, plus active ingredients. The 17 companies in Annex III, including Pfizer, Merck, Novartis and Eli Lilly, start July 31; everyone else starts September 29. Why it matters: contract manufacturers supplying pharma or medtech customers should confirm which annex applies, since that decides whether the pricing conversation happens this week or in six. Source: Crowell & Moring, www.crowell.com/en/insights/client-alerts/trump-administration-imposes-section-232-tariffs-on-patented-pharmaceutical-imports-tiered-rate-structure-takes-effect-beginning-july-31-2026 (2026-04-07)

China has escalated enforcement of rare earth export controls over the past two months.

Beijing detained two Japanese nationals in Dalian in May over alleged rare-earth smuggling, pursued a domestic optics company for mislabeling germanium-containing lenses, and in June added rare earth miners MP Materials and USA Rare Earth to its export control list along with eight other US entities. A new MOFCOM public-reporting mechanism took effect July 1. Why it matters: expect longer licensing delays and heavier customs scrutiny on China-origin rare-earth or germanium shipments. Enforcement, not new rules, is the story, and it's harder to plan around than a published rate. Source: Morgan Lewis, www.morganlewis.com/pubs/2026/07/recent-china-export-control-actions-signal-active-enforcement-for-rare-earths-and-strategic-minerals (2026-07-01)

Trade group flags Section 301 exposure for machine shops, mainly on machine tools, not steel and aluminum.

NTMA's breakdown says steel and aluminum are already covered under separate tariffs as high as 50%, so the new Section 301 action is unlikely to move those costs further. The exposure is on machine tools and equipment from Germany, Japan, South Korea, Switzerland and Taiwan, where new duties could exceed 10%. Why it matters: if you have a machine or tooling order from those countries in the pipeline, price it before the change lands. Source: NTMA, ntma.org/section-301-tariff-changes-coming/ (2026-06-22)

This week is not a clean "tariffs up" or "tariffs down" story. Section 122 lapsing looked like a cost cut until the same-minute Section 301 replacement showed up, and Brazil and pharma raise costs for specific supply chains. What matters is your input list against your country-of-origin exposure: pull actual duty rates per line item before you send a number.

If your quoting process still uses one blended "tariff adjustment" line, this week breaks it. Sort your open purchase orders by country of origin. For Brazil lines, check the exemption annex first: coffee, beef, aircraft parts and Section 232 metals are carved out, ethanol is not. For rare-earth or germanium lines, add lead time to your licensing estimate. For machine or tooling from Germany, Japan, South Korea, Switzerland or Taiwan, price it now, before any new Section 301 rate lands, then re-run your job costing template against the current baseline. One afternoon of work is the difference between a quote that holds and one that erodes margin.

No sourced quote was selected for this issue. None of this week's source stories included a named manufacturer or shop owner speaking on the record.

Sort your last 90 days of purchase orders by country of origin and flag every line from Brazil, from one of the 60 economies under the new Section 301 duty, or carrying rare-earth content. Check each against current exemption and licensing status before your next quote.

If you want to hear how other manufacturers handle sourcing and cost pressure in real conversations, our podcast covers exactly that. Details at leadmegaphone.com.