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President Trump is pursuing new, targeted tariffs after legal setbacks, while simultaneously signaling he will not renew the USMCA trade agreement.
President Donald Trump is restructuring his approach to international trade by proposing new, targeted tariffs while signaling an end to the United States-Mexico-Canada Agreement (USMCA) [1, 2]. These moves follow a series of legal challenges that invalidated his previous attempts to impose broad, emergency-based import taxes [2, 3].
Key takeaways
After the Supreme Court ruled in February that the administration lacked the authority to use emergency powers for broad import taxes, the White House has shifted to using Section 301 of the Trade Act of 1974 [2]. Unlike the emergency powers previously used, Section 301 allows for investigations into specific trade practices and carries no set limit on the duration or level of tariffs [2]. U.S. Trade Representative Jamieson Greer recently released a 98-page report alleging that 60 trading partners have failed to adequately restrict goods made with forced labor [2].
Under this new proposal, 16 economies—including Canada, Mexico, and the European Union—would face 10% tariffs, while 44 others, including China and Japan, would face 12.5% levies [3]. These measures are currently in a public comment period, with hearings scheduled for July 7 [2]. While the administration aims to use these tariffs to address what it calls an "unlevel playing field," the government is simultaneously fighting in court to avoid fully refunding $166 billion in tariffs collected under the now-overturned emergency authority [2, 3].
The administration’s trade policy faces further uncertainty following President Trump’s announcement that he is not interested in renewing the USMCA [1]. The agreement, which went into effect in 2020, currently governs trade between the U.S., Canada, and Mexico, with approximately 80% of imports from these nations qualifying as treaty-compliant and thus exempt from many existing tariffs [1].
While the administration has indicated that products covered by the USMCA would be spared from the newly proposed forced-labor tariffs, the broader threat to the treaty itself creates a potential for significant economic disruption [1, 3]. The U.S. conducts roughly $2 trillion in annual trade with Canada and Mexico, making them the nation's largest trading partners [1].
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The investigation was launched to address the failure of trading partners to impose or effectively enforce prohibitions on the importation of goods made with forced labor, which the U.S. argues burdens its commerce.
The USTR identified Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan as economies that have forced labor prohibitions but have failed to enforce them effectively.
China opposes the tariffs, viewing them as protectionist tools, but has signaled willingness to participate in a 'Board of Trade' to negotiate reciprocal tariff reductions.
The shift from broad, emergency-based tariffs to targeted, investigation-backed levies represents a more methodical, albeit potentially longer-lasting, trade strategy [2]. Because U.S. importers typically pass tariff costs onto consumers, the administration is attempting to balance its trade agenda with concerns over inflation by exempting essential goods like food and rare earth minerals [3]. With midterm elections approaching, the economic impact of these policies remains a central focus, as the administration navigates both domestic legal battles and the potential expiration of a major regional trade pact [1, 3].
AI-assisted synthesis by the TrendWatcher Editorial Desk · sourced from 3 outlets · Jun 12, 2026 · How we report