The U.S. is preparing to impose a 7.5% tariff on Chinese imports as part of a Section 301 investigation into excess manufacturing capacity, according to sources familiar with the matter. The proposed duty would bring the total tariffs imposed under President Donald Trump’s second term to approximately 20%, a level confirmed by China’s Commerce Ministry as the upper limit for replacement tariffs following the U.S. Supreme Court’s invalidation of earlier tariffs based on the International Emergency Economic Powers Act (IEEPA).
The current replacement tariff rate stands at 12.5%, leaving 7.5 percentage points of headroom before reaching the 20% ceiling. The U.S. has already refunded roughly $81–100 billion in duties collected under the struck-down IEEPA authority. Separately, tariffs resulting from a concluded forced labor probe in June range between 10% and 12.5% across 60 economies.
The Section 301 investigation into excess capacity was launched in March 2026, with the forced labor probe wrapping up in June. Administration officials aim to finalize and publish the overcapacity inquiry results ahead of the September 24 summit between Trump and Chinese President Xi Jinping in Washington. The two sides are also negotiating to extend a bilateral trade truce that is set to expire on November 10.
Exact tariff rates remain under review, with one potential approach involving the announcement of a higher headline rate for China while suspending part of it to achieve the targeted 7.5% effective duty. U.S. Trade Representative Jamieson Greer has noted that the excess capacity investigation is more complex than the forced labor probe, contributing to the delay in its completion.
China’s Commerce Ministry stated in a July 27 response that it would continue monitoring U.S. measures and reserve the right to take all necessary actions in response.
