Section 301 Shields 10% Tariffs

The Trump administration has shifted its global tariffs onto a firmer legal footing. The previous route collapsed in court. The new one rests on Section 301 of the Trade Act of 1974, a US trade law that allows Washington to impose duties after investigating foreign practices it says damage American commerce (White House). The duties came into force on July 24 and cover 60 economies. For EU products, the combined tariff generally reaches 10% (Morgan Lewis).

For European exporters sending €554 billion a year in goods to the United States (Eurostat), including firms in small open economies like Malta that depend on predictable access to larger markets, the rate is only part of the problem. The bigger change is that these tariffs may now be harder to remove through the courts.

Why this legal route is harder to kill

The Supreme Court struck down the administration's earlier tariffs because they relied on IEEPA, the International Emergency Economic Powers Act. That 1977 emergency-powers law does not actually give the president authority to set tariffs (NPR). A stopgap under Section 122, a balance-of-payments tool limited to 150 days, gave the administration time to build a more durable legal case (Thomson Reuters).

Section 301 is that case. The US Trade Representative opened 60 investigations in March, accusing each economy of failing to ban imports made with forced labour. It collected more than 1,600 written comments and heard evidence from over 100 witnesses before setting the rates (White House). The paperwork is the point. When courts review Section 301 tariffs, the question is whether the government abused a valid trade instrument, not whether it used a law that never applied in the first place (Forbes).

The lawsuits arrived within hours. The Liberty Justice Center argues that the forced-labour justification is a pretext for rebuilding the global tariff wall already rejected by the courts (Liberty Justice Center). UCLA tax-law professor Kimberly Clausing called the tariffs "clearly unlawful" (CNBC). But proving that an administrative process was abused usually takes longer than proving that the wrong law was used. Fast relief is therefore unlikely, unless judges accept the pretext argument at an early stage.

Who pays, and how the cost travels

The tariff operates like a tax at the US border. The American importer pays it and then decides whether to absorb the cost, increase consumer prices, or push the European supplier to cut its price (Alvarez & Marsal). For European firms, including smaller exporters without much pricing power, that last option is where the pressure lands.

The exposure is not evenly spread. Pharmaceuticals accounted for 29% of EU exports to the US in 2025. Ireland alone shipped €160.6 billion in pharma to American buyers, almost 43.8% of all EU pharma exports (Eurostat). PwC Ireland said Irish pharma was temporarily protected by exemptions, but pointed to Trump's threat of 100% tariffs on generics within two years (PwC Ireland). The exemption holds for now. Whether it survives into next year is what Irish pharma executives must build into their investment plans.

Germany takes the blow through its industrial base. The ifo Institute said more than 60% of German industrial firms reported being hurt by US tariffs. In the automotive sector the figure rose to 74%, with ifo saying tariffs were "hampering investment activity" (ifo). That damage does not stop at Germany's border. When German carmakers cut orders or postpone model investment, suppliers across central Europe feel the weaker volumes. The German auto sector has already lost more than 70,000 jobs in 2024 and over 40,000 in 2025 (Eurofound).

Italy shows what tariff uncertainty does to smaller firms. Confartigianato, the Italian artisan-business federation, reported that in sectors dominated by micro-firms — food, fashion and furniture — ten months of tariff uncertainty produced an 8.3% fall in US sales (Giornale delle PMI). For a Parmigiano producer, the exact rate matters less than knowing whether it will still apply when the next container leaves port.

Duration is the real pressure

A tariff does not need to survive a final Supreme Court ruling to reshape trade. It only needs to remain in place long enough to change contract prices, delay factory investment and push companies to reroute supply chains (FreightWaves). Eurostat data already points in that direction: the EU-US goods surplus fell from €81.2 billion in Q1 2025 to €40.8 billion in Q3, a pattern consistent with exporters front-loading shipments before expected tariffs and then pulling back (Eurostat).

By moving from an emergency proclamation to a managed trade remedy backed by a thick administrative record, Washington has given itself a legal base that could keep the duties running through years of litigation. For European firms, Malta included, built around stable transatlantic access, the decisive question is now less the 10% line on the invoice than how long that line stays there.