Section 301 FLIP Tariffs: How the Four Tiers Change Landed Cost

On July 24, 2026, at 12:01 a.m. ET, a new Section 301 duty layer took effect across 60 country and economy designations. Most summaries circulating right now describe it as a two-tier action: 10% for some partners, 12.5% for the rest.

The Federal Register action has four tiers. Two of them work one way, two work another, and the difference decides whether your landed cost moves by three points or nine.

If you buy chemicals from more than one region, that distinction is the only part of this action worth memorizing.

Key Takeaways

• The action covers 60 country and economy designations across four tiers, effective July 24, 2026 (USTR Final Action, 91 FR 47318).

• Tiers One and Two top up to a floor of 10% or 12.5%. Tiers Three and Four add 10 or 12.5 points on top of MFN, with no cap.

• Canada, Mexico, the UK, and India sit in Tier Three, not the 10% floor tier.

• Some chemical exclusions apply to pharmaceutical use only. Verify use, not just HTS.

What actually changed on July 24, 2026?

A new forced-labor Section 301 duty layer now applies by country or economy and by MFN rate, unless a good is specifically exempted (USTR Final Action, Federal Register Doc. 2026-15181, 91 FR 47318, published July 28, 2026). Presidential action came July 23; the duties took effect the next morning at 12:01 a.m. ET.

The structure is what's new. Earlier rounds applied one rate to one country. This one sorts 60 designations into four tiers, and the tier determines the arithmetic, not just the number.

That's why a rate table alone won't tell you your cost. You need the tier, your MFN rate, and your product's end use.

Why do four tiers matter if the headline says 10% or 12.5%?

Because Tiers One and Two are floors and Tiers Three and Four are additions. A Tier One good with a 6.5% MFN rate lands at 10%. A Tier Three good with the same 6.5% MFN rate lands at 16.5% (California Chemical analysis of 91 FR 47318).

Here's the mechanic in each direction:

• Tier One — 10% floor. FLIP = max(0, 10% − MFN). Total = max(MFN, 10%). Applies to the European Union and Taiwan.

• Tier Two — 12.5% floor. FLIP = max(0, 12.5% − MFN). Total = max(MFN, 12.5%). Applies to Japan, South Korea, and Switzerland.

• Tier Three — MFN +10 points, no cap. Total = MFN + 10%.

• Tier Four — MFN +12.5 points, no cap. Total = MFN + 12.5%.

Both floor tiers are top-ups, not reductions. If your MFN rate already exceeds the floor, the floor does nothing and you pay MFN. If you're in Tier Three or Four, your MFN rate is the starting line rather than the ceiling.
Which tier is your supplier's country in?

Fifty-five of the 60 designations fall into the two additive tiers, and several partners most buyers assume are in the 10% group are not (91 FR 47318). Tier Three covers 17 designations; Tier Four covers 38.

Tier Three (+10% on top of MFN): Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad & Tobago, United Kingdom.

Tier Four (+12.5% on top of MFN): Algeria, Angola, Australia, Bahamas, Bahrain, Brazil, Chile, China (PRC), Colombia, Costa Rica, Dominican Republic, Egypt, Guyana, Hong Kong (China), Iraq, Israel, Kazakhstan, Kuwait, Libya, Morocco, New Zealand, Nicaragua, Nigeria, Norway, Oman, Peru, Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Thailand, Türkiye, United Arab Emirates, Uruguay, Venezuela, Vietnam.

Note that China (PRC) and Hong Kong (China) are treated as separate investigated economies but land in the same tier.

Several published summaries of this action place Canada, Mexico, the UK, and India in the 10% tier alongside the European Union. They're in Tier Three. On a 6.5% MFN chemical, that mistake understates duty by 6.5 percentage points, and on a 10% MFN chemical it understates by 10.

The chemical exclusions are narrower than they look

Exclusion coverage in this action turns on end use, not just classification. Some chemical exclusions are pharmaceutical-use only, meaning an industrial grade of the same molecule may not qualify (91 FR 47318, Annexes I and II).

This is where a lot of buyers are going to get surprised. A broad reading of the annexes suggests chemicals, plastics, and petroleum products are largely carved out. The narrower reading — the one that matches the annex text — is that some of those carve-outs attach to a specific declared use.

So the question isn't only "what's my HTS?" It's "what's my HTS, my origin, and my use, checked against both annexes?"

Our read: In our own line reviews, end-use qualification is the exclusion condition buyers overlook most often. An HTS match on its own isn't a clean answer here.

For help mapping this against a specific product line, see our [INTERNAL-LINK: chemical product catalog → main product listing page].

What about stacking, Section 232, and USMCA?

This action is one layer, not a replacement for the others. AD/CVD orders, other duties, fees, and charges continue to apply, and existing China Section 301 duties may also stack unless a specific exemption applies (91 FR 47318).

Three carve-outs worth confirming with your broker:

1. USMCA. Canada and Mexico goods entered free of duty under USMCA are exempt from this action. Goods from those countries that don't qualify remain in Tier Three.

2. Section 232. Only Section 232-covered articles and parts listed in U.S. Note 52(f) are exempt. Being generally "a 232 product" isn't the test; being on the list is.

3. In-transit provisions. Confirm whether any grace period applies to shipments already on the water. Ask your broker for the exact entry-date cutoff rather than relying on a summary.

The table below shows MFN + FLIP subtotals across common ad valorem rates. Specific or compound MFN rates need an ad valorem-equivalent calculation before you can use it.

Why this round may outlast the ones it replaced

The durability question matters more than the rate question, and the answer sits in the authority chosen. Section 301 of the Trade Act of 1974 has proven considerably more persistent than emergency-authority tariffs: the Section 301 duties imposed on Chinese goods in 2018 are still in force in 2026, across three administrations and multiple rounds of litigation.

Section 301 also carries a built-in statutory review cycle rather than an expiration date. Duties continue unless USTR affirmatively modifies or terminates them, and the four-year review process is a review, not a sunset.

For sourcing, that changes the planning horizon. A duty you expect to expire is something you absorb, hedge, or wait out. A duty that persists across administrations is something you redesign around.

Our read: We're treating this framework as structural rather than temporary in supplier conversations. That means requalifying alternate origins now instead of waiting for a rate change that may not come.

Buyers tracking this alongside freight and feedstock movement can follow our [INTERNAL-LINK: industry news and market updates → news index page].

What should chemical buyers do this month?

Start with exposure, not with rates. Buyers who know their tier-by-tier spend can price and requalify in days; buyers who don't will spend the first two weeks pulling entry summaries.

1. Pull 12 months of purchases by country of origin. Map each origin to its tier. Sort by spend.

2. Recalculate landed cost per line using your actual MFN rate, not the tier headline.

3. Verify HTS and origin against Annexes I and II, and confirm whether any exclusion you're relying on is use-restricted.

4. Check USMCA qualification on every Canadian and Mexican line. Duty-free entry under USMCA is the exemption, not the country.

5. Identify substitution candidates where a Tier One or Tier Two origin can supply an equivalent grade.

6. Confirm stacking exposure on Chinese-origin material already subject to existing Section 301 duties.

Frequently Asked Questions

When did the new Section 301 FLIP tariffs take effect?

The duties took effect July 24, 2026, at 12:01 a.m. ET, following Presidential action on July 23 and publication in the Federal Register on July 28, 2026 (91 FR 47318). They apply across 60 country and economy designations sorted into four tiers.

Are Canada and Mexico exempt from the new Section 301 duties?

Partially. Canadian and Mexican goods entered free of duty under USMCA are exempt from this action. Goods that don't qualify for USMCA treatment fall into Tier Three, which adds 10 percentage points on top of the MFN rate with no cap.

Are chemicals excluded from the FLIP Section 301 tariffs?

Some are, but coverage is narrower than it appears. Certain chemical exclusions in Annexes I and II apply to pharmaceutical use only, so an industrial grade of the same product may still be dutiable. Verify HTS, origin, and declared end use together.

Can these duties stack with existing Section 301 tariffs on China?

Yes. Existing China Section 301 duties may stack with this new layer unless a specific exemption applies, and AD/CVD orders, fees, and other charges continue independently. Only Section 232 articles listed in U.S. Note 52(f) are exempt from this action.