The United States on Friday imposed tariffs of 10 or 12.5 percent on 99.4 percent of its imports from 60 economies, replacing a temporary 10 percent duty that expired the same day. The move, framed under Section 301 of the Trade Act of 1974 as a penalty for insufficient enforcement against forced-labour goods, lifts the effective US tariff rate to roughly 12.4 percent, according to Yale’s Budget Lab. It follows the Supreme Court’s February ruling that struck down the original “Liberation Day” tariff regime, forcing the administration to find a new legal pathway. The immediate fiscal effect is a far smaller revenue stream than the $1.5–2 trillion once projected over a decade; the Committee for a Responsible Federal Budget now estimates the new duties will raise about $900 billion.

Legally, the replacement rests on contested ground. The US Court of International Trade has already deemed the interim tariffs illegal, and a fresh lawsuit has been filed against the new duties. Critics in Washington note that Section 301 requires a finding of “unjustifiable” or “unreasonable” practices, yet the administration’s four-month investigation offered few details on how it determined that countries such as Norway, Switzerland or EU member states fail to police forced labour. Scott Lincicome of the Cato Institute described the premise as “risible” for advanced economies. Even if targeted nations enact the import bans Washington demands, US trade lawyers point out they would still need to persuade the administration that enforcement is effective before tariffs are lifted, leaving no clear path to relief.

Viewed from Brasília, President Lula da Silva called the tariffs a strategic error that will disrupt integrated supply chains and push Brazilian firms to replace American suppliers. European officials, from Brussels to Stockholm, note that EU labour standards exceed those in the US and point to the EU-Mercosur trade deal, provisionally in force since May, as a counter-model of cooperation. The economic burden inside the US is becoming measurable: the Budget Lab estimates the tariffs will add 0.7 percentage points to consumer prices, costing the average household $975 per year, with the poorest decile losing 1.4 percent of disposable income.

Compounding the trade shock, a simultaneous energy disruption is unfolding. Sustained US strikes on Iran and Houthi attacks on Saudi tankers in the Red Sea have threatened both the Strait of Hormuz and the Bab el-Mandeb chokepoints simultaneously for the first time in recent history. Brent crude briefly breached $100 a barrel and, though it eased to $97, remains up 30 percent in a month. Analysts in London warn that a prolonged disruption could push oil to $120 by the fourth quarter, creating a stagflationary impulse that may force the Federal Reserve to reconsider its rate stance. For emerging economies such as Mexico, the oil spike is a net negative because refined-product imports outweigh crude exports.

A second Section 301 investigation, opened in March, now looms. It targets “excess capacity” in steel, aluminium, automobiles, batteries, semiconductors and chemicals, and Capital Economics expects tariff rates to rise again before year-end. The legal appeals against the current forced-labour tariffs will work through the courts, while the trajectory of oil prices hinges on whether the fragile pause in US-Iran talks holds.