July 2026 Updates on UK/USA Tariffs – Section 301

The United States has identified these 60 countries as having trade practices it considers unfair and has directed them to remove or reduce those practices, with the new Section 301 tariffs being used as leverage.

Under Section 301 seventeen countries including the UK and Canada have been set a new 10% rate. This stacks on top of existing MFN or base rate tariffs.

A further 38 countries, including China, Russia and Brazil, have been set a rate of 12.5%. This also stacks on top of the base rates tariffs.

The EU and Taiwan were deemed to have started work already and were set a very favourable 10% capped rate. While this does stack onto any base rate tariffs, it is capped at 10% total. If the goods attract a 5% base rate, they get only an additional 5% to bring them up to 10% in total.

Japan, South Korea and Switzerland were set a 12.5% capped rate, that behaves as above but this time capped at the higher total 12.5%.

–

The EU-US Trade Deal on Apparel

Confusingly there is also an EU-US trade deal in place. This too came into effect in July 2026 and sets a fixed 15% rate on EU made apparel. This actually overrules the Section 301 ruling, meaning the 10% Capped rate doesn’t apply on clothing. Instead it is the EU-US 15% which would apply. On non-apparel goods like ceramics or jewellery, then its the Section 301 total that will be applied.

–

Goods made in China

I discussed Country of Origin in a previous blog, but it is still important to understand that when goods arrive in the US it is not where they arrive from, but where they were “Substantively” made that is the main factor in determining their tariff rate.

Goods made in China and repackaged or relabelled in the UK are still considered Made in China products. This means they will be subject to the higher rates, including the Section 301 List 4A Rate. This additional 4A List Rate which is also under Section 301 has actually been in place since 2019 and subjects these goods to an additional 7.5% on apparel, hand bags and some other goods.

–

The True End of De Minimis 

At the time of writing there is no longer any mechanism for the $800 De Minimis. In fact, all goods originating from around the world will now face at least a 10% rate which includes all eCommerce activity. So US citizens buying goods online will for the first time be facing direct tariffs. This may represent additional opportunities for US retailers who suddenly have a more protected trading market for imported goods – though the increased costs of import will need to be factored in.

–

Some Woolly Case Studies

Whilst it is still very early days for these changes, with only a few office hours since the new regulations were installed, we can take a look at how the charges will apply.

On 100% wool sweaters made in the UK the baseline or MFN Rate is 16%. The new Section 301 tariff introduces a 10% additional rate that stacks on top of the base rate. So 26% in total. $100 worth of these goods, now costs $126 plus shipping.

On 100% wool sweaters made in the EU the baseline rate is the same 16%, but due to the EU-US deal, these are set at a fixed 15%. So $100 of goods would now cost $115 plus shipping.

On the same 100% wool sweaters, this time made in China, but imported through the EU you’ll be paying 16% MFN rate + 7.5% List 4A + 12.5% Section 301 for a total of 36.5%. That’s $100 worth of goods costing in effect $136.5 plus shipping.

100% Wool Sweaters	Value	Tariff	Total
UK	$100	26%	$126
EU	$100	15%	$115
China	$100	36.50%	$136.50

Sting in the tail…

One of the real difficulties for us all to navigate are the fees charged by the shipping agents. These can be incredibly murky and in our own experience, even the shipping agents aren’t always the best informed.

Parcels can be sent off into the air with little idea what the resulting duties will be on arrival and large penalty clauses are put in place if anything goes wrong.

In essence, the shipping agent is paid a fee for collecting the goods from the vendor, sending it across the ocean, clearing US customs and then delivering the goods to your store. It’s an incredibly complex supply chain these days and fees have gone up considerably in the last 18 months as a result.

–

Understandably companies like Fedex, UPS and DHL are not bearing the increased costs of rising duties and processing fees at US ports. Instead these are passed right on to you, either as invoices you must pay before delivery, or as charges that go back on the vendors account. Your vendors may then pass them on to you.

There can be weeks or even months between these events, and the cost of the goods arriving may not be known until well after you have actually sold the items!

The best way to mitigate this is to spend time talking to your suppliers and making sure you fully understand the delivery process for each company. There may be changes you, and they, can put into place to keep the costs down and ensure a smooth delivery.

–

US Deliveries from Bill Baber Knitwear

It’s a very active situation, but we have already slightly adjusted our process. Our aim is to get your goods to you with the minimum of fuss and exposed to the least duty possible!

The Royal Mail have already adjusted their PDDP terms to the USA to accommodate the Section 301 changes. There is a new $2500 limit on single shipments, a significant increase on the $800 De Minimis. Goods arriving are also limited to 30KGs in a single box, that’s around 66lbs worth of goods. So the shipping element of our costs have been slightly reduced.

Shipping Method	Order Value	Number of Parcels	Shipping Cost
De Minimis	$2400	3 packages	$210
Section 301	$2400	1 package	$140

The good thing about the Royal Mail is that all duties and handling are paid in advance! So its very clear what you’ll need to pay and handling costs are an incredibly reasonable $0.75 per shipment!

–

Why not send it by courier?

In truth, we sometimes do. When we have an order to send to the US, we do some calculations in advance and choose the most cost effective method for you.

However, there are significantly higher costs from couriers to process parcels into the US. Where the Royal Mail has only $0.75 per shipment, the couriers typically charge 3-5% which on the examples above would add $70 – $120 just in processing fees.

I would imagine this is due to the fact that couriers will pay the duties on your behalf in advance and then wait for you to reimburse them. As a result they are probably sitting on billions of dollars of charges per day and the higher processing fee covers them if something goes wrong. With the Royal Mail system, as they are paid in advance, they have limited exposure.

For comparison, if we were to ship the same $2400 parcel to the USA via courier (looking at the cheapest 3% end of the handling fee scale), we would be looking at the following:

			Shipping	Processing	Total
Royal Mail	$2,400	1 package	$140	$0.75	$140.75
UPS	$2,400	1 package	$110	$72	$182
FEDEX	$2,400	1 package	$160	$72	$232
DHL	$2,400	1 package	$270	$72	$342

Simply put, we are not a large enough business to be able to put our stock through distribution warehouses in the US. We make our entire collection here in Edinburgh in a small artisanal workshop and studio. We make to order most of the knitwear we produce, there isn’t a warehouse here in the UK stuffed full of ready made knitwear.

Some businesses with larger factories may produce their collection early and then have it ready for when you place your order – for those guys it makes perfect sense to shift the warehousing in to the USA. Their stock is closer to your store, so delivery times are shorter and the duties are all paid upfront.

–

A Word of Caution…

It is important to highlight one area where businesses need to exercise caution. While it is technically possible to declare a lower value for imported goods, deliberately undervaluing imports is illegal and can result in significant penalties under U.S. customs law.

This applies equally to goods shipped from an EU factory to a warehouse in the United States. Given the volume and frequency of these shipments, the risk of detection and enforcement is substantial.

For U.S. customs purposes, the transaction value is generally regarded as the correct customs value. In most cases, this is the price actually paid or payable for the goods—for example, the price a U.S. importer pays its EU supplier or, in an ecommerce sale, the price paid by the customer. It is not a lower value declared solely to reduce customs duties when transferring goods between an EU factory and a U.S. warehouse.

–

What’s Next?

Section 301 does not have a built in deadline and as such can continue as long as the US Authorities deem it neccessary, also it is more time consuming to change the rates each country is billed as the investigations must make the case for it. As such we may be looking at Section 301 for some time. We will continue to keep our eyes peeled and if the situation changes we will let you know.

Tell me about refunds!

IEEPA has been found to be illegal and by implication the tariffs collected under that framework need to be returned. How that will work is unclear and may be a long road ahead. In our own case we have paid duties on all shipments into the US since August 2025 and will continue to do so through 2026. We work hard to mitigate these costs for you and will seek any refunds available if that opportunity arises.

Thank You

We’ll continue to monitor the situation and will keep this page updated as and when there are any changes. Do let us know if you have any questions at all by emailing info@billbaber.com – we have learnt a lot over the last 18 months and are happy to share any and all knowledge!