US Effective Tariff Rate falls to 7.4% under new trade regime

July 30, 2026 (MLN): The U.S. effective tariff rate (ETR) has dropped to 7.4% from 9.4% following the replacement of the temporary Section 122 import surcharge with new Section 301 tariffs covering goods from 60 economies, including the European Union.

The latest estimate by Fitch Ratings also shows a change in the methodology, with annualized U.S. trade flows for January-May 2026 used instead of 2024 import data applied in earlier calculations.

Had 2024 trade patterns remained unchanged, the policy shift alone would have reduced the U.S. ETR to 8.4%. The further decline to 7.4% reflects changes in the sources and composition of U.S. imports.

Annualized January-May 2026 data show imports of electronics and semiconductors, most of which are exempt from tariffs, rising to around $800 billion from $340bn in 2024.

At the same time, imports from China, which carries the highest ETR among major U.S. trading partners, declined 43%.

The revised tariff structure follows the expiration of President Donald Trump’s temporary 10% global import surcharge under Section 122 of the Trade Act of 1974.

The measure came into effect on February 24 and expired on July 24 after the U.S. Supreme Court invalidated tariffs previously imposed under the International Emergency Economic Powers Act.

The Section 122 surcharge was subsequently replaced with Section 301 tariffs targeting products from economies covered by U.S. Trade Representative investigations into forced labor.

Under the new framework, imports from Mexico, Canada, India and the U.K. face a fixed additional tariff of 10%, while China, Vietnam and most other economies covered by the investigations face an additional 12.5%.

For the European Union and Taiwan, the Section 301 rate is structured so that the combined most-favored-nation (MFN) and Section 301 tariff does not exceed 10%. The combined tariff ceiling is 12.5% for Japan, South Korea and Switzerland.

Countries under the capped system do not face an additional Section 301 duty when their existing MFN tariff is already at or above the applicable threshold.

Where MFN tariffs are below the threshold, only enough additional duty is imposed to reach the cap. The framework also provides broad exemptions for certain products.

Fitch’s calculation separately factors in a 25% Section 301 tariff on Brazil, which also has significant product exclusions. The estimate further includes announced Section 338 tariffs of 50% on a limited range of Canadian motor vehicle, dairy and wine imports, due to take effect on August 19, 2026.

The Canadian measures are estimated to cover around $17 billion worth of goods. If the tariffs are not implemented as announced, Canada’s ETR would fall by roughly 2.2 percentage points, while the overall U.S. ETR would decline by approximately 0.25 percentage points.

China remains subject to the highest ETR among major U.S. trading partners, with its rate increasing to about 22.3% from 19.2% under the Section 122 surcharge.

Brazil’s ETR rose to 14.8% from 11.4%, while Japan’s increased to 13.3% from 12.6%. Switzerland’s ETR climbed to 7.1% from 4.3%, and Canada’s rose to 5.3% from 4.1%.

Several trading partners recorded lower effective tariff rates. Vietnam’s ETR declined to 10.2% from 13.2%, while South Korea’s fell to 9.7% from 11.3%. Taiwan’s rate dropped to 2.8% from 5.5%.

India’s ETR declined to 8.3% from 10.7%, while Mexico’s fell to 3.7% from 5.0%.

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