📈 US Effective Tariff Rate Drops to 7.4% Following New Section 301 Regime

• Overall Figures & Policy Shift: The U.S. Effective Tariff Rate (ETR) declined from 9.4% to 7.4% after the temporary 10% Section 122 global surcharge expired on July 24 and was replaced by targeted Section 301 tariffs covering 60 economies. Revised Fitch Ratings estimates using annualized Jan–May 2026 trade flows also contributed to the rate reduction. • Sector & Trade Shifts: U.S. imports of tariff-exempt electronics & semiconductors rose significantly from US$ 340 Bn in 2024 to approximately US$ 800 Bn in 2026. Meanwhile, imports from China dropped by 43% over the same period, significantly shifting U.S. import composition. • Top Markets & ETR Movements: • China: Rose to 22.3% (from 19.2%), maintaining the highest ETR among major partners. • Brazil: Increased to 14.8% (from 11.4%), incorporating a 25% Section 301 tariff. • India: Decreased to 8.3% (from 10.7%). • Vietnam: Reduced to 10.2% (from 13.2%). • Mexico: Dropped to 3.7% (from 5.0%). • Canada: Climbed to 5.3% (from 4.1%), with an additional 50% tariff on US$ 17 Bn of motor vehicle, dairy, and wine imports scheduled for Aug 19, 2026. • Framework Regimes: Section 301 applies a fixed 10% additional duty on imports from India, Mexico, Canada, and the UK, and 12.5% on China and Vietnam. EU and Taiwan imports face capped combined MFN and Section 301 rates of up to 10%, while Japan, South Korea, and Switzerland are capped at 12.5%. _(Based on provisional annualized Jan–May 2026 trade data)_