PNC Economics Research Tariff Update 24 July 2026

PNC Economics Research 24 July 2026

Tariff Update: More Durable Tariff Regime, Not a Bigger One

Headlines Brian LeBlanc  The U.S. Trade Representative announced a new set of tariffs that replace the expiring Section 122 tariffs the Trump Administration imposed in response to the Supreme Court striking down the IEEPA tariffs this past February. Unlike Section 122, the new Section 301 tariffs have no expiration date and rest on firmer legal footing than prior authorities used.

 The tariffs effectively reinstate a near-universal 10% baseline tariff, with a handful of trading partners facing rates closer to 12.5%. The largest increase falls on Brazil, whose statutory tariff rate was raised to 25%. Additional tariffs were also imposed on a limited subset of Canada-U.S. trade earlier this week, though the overall impact on most trading partners remains relatively modest.

 The net effect will be small. We estimate the actual tariff rate paid by U.S. importers rises from 6.9% currently to somewhere in the range of 7.7% - 8.2% by August when the separate 50% tariffs on select Canadian goods take effect. Brazil’s tariff rate will roughly triple, but most other trading partners see very little change in their effective tariff rate.

 Importantly, the new tariffs do not eliminate nearly any of the exemptions that have muted the impact of higher duties to date. Nearly 60% of imports entered the United States duty-free in May, and most of those exemptions remain in place under the new regime. As a result, the effective tariff rate paid by importers is likely to remain about half of the statutory rate.

 At the same time, the Treasury is roughly halfway through refunding the $166 billion in IEEPA tariffs that the Supreme Court deemed unlawful. Refunds exceeded new tariff revenue in June and continued to do so through part of July. Several companies have noted on recent earnings calls that tariff refunds have either supported margins or been passed through to customers.

PNC Economics Research 24 July 2026

New tariffs to replace the expiring Net effect of the new tariffs will be Section 122 tariffs modest The U.S. Trade Representative announced a new set The new Section 301 tariffs appear designed largely to of tariffs to replace the Section 122 tariffs that were preserve the tariff structure that has been in place imposed after the Supreme Court struck down the since the IEEPA tariffs were overturned. We estimate Trump Administration's IEEPA tariffs earlier this year. the effective tariff rate paid by U.S. importers will rise The new tariff regime effectively reinstates a global from roughly 6.9% today to between 7.0% and 8.0% by 10% baseline tariff, with a handful of trading partners August. Most of the increase reflects higher tariff rates facing slightly higher rates of 12.5%. Brazil is the on imports from Brazil. primary exception, facing a much higher statutory tariff rate, while additional tariffs on a narrow subset Figure 2: Effective tariff rate of Canadian imports are scheduled to take effect in 12% August. IEEPA struck down 10% Liberation Day Figure 1: Estimated change in effective tariff rate 8% after considering exemptions 6% New Section Brazil 10.7pp 301 tariffs 4% China 2.7pp

Canada 2.6pp 2% Japan 1.2pp 0% Korea, South 1.1pp Jan '24 Jul '24 Jan '25 Jul '25 Jan '26 Jul '26 Germany 1.0pp Sources: Census, PNC estimates Thailand 1.0pp

All other 0.4pp Additional tariffs on a limited set of Canadian imports 0pp 2pp 4pp 6pp 8pp 10pp 12pp will also put some upward pressure on the effective tariff rate. That said, it remains unclear whether those Sources: Census, PNC estimates tariffs will ultimately take effect as scheduled or serve primarily as leverage in ongoing trade negotiations. Unlike Section 122, the new Section 301 tariffs have no expiration date and rest on firmer legal footing. While President Trump relied heavily on Section 301 tariffs Nearly 60% of all imports will still enter during his first administration, his second the country duty-free administration initially turned to emergency authorities such as the International Emergency Importantly, the new tariffs leave in place most of the Economic Powers Act (IEEPA) to…