You costed the program in June.
The duty rate you used is still correct.
What sits on top of it isn't.
On July 24 a new Section 301 forced-labor tariff took effect on goods from sixty economies — ten percent for some, twelve and a half for the rest — and it did something to apparel costing that is more interesting than adding a line.
It put a price on a rule you were already either following or failing.
Nobody told you what that rule was worth. Here it is.
Your Apparel Duty Rate Didn't Change in July. The Section 301 Forced-Labor Tariff Sits On Top of It.
The mechanism is worth understanding once, because it isn't the tariff story of the last two years.
USTR opened Section 301 investigations into sixty economies in March, found in June that they had failed to impose and effectively enforce a prohibition on importing goods made with forced labor, and imposed additional duties effective 12:01 a.m. Eastern on July 24, 2026.
Economies that committed to adopt and enforce an import ban landed at ten percent. The rest landed at twelve and a half.
Your underlying rate is untouched. This is a surcharge above it, and if you want the rate-by-country picture, our apparel tariff guide already keeps that table current.
That's the headline.
It is not the part that reaches a knit costing sheet.
Run One Cotton Tee Through All Four Cases
Same garment. Same fabric. Four origins, four outcomes.
Made in Guatemala, qualifying under CAFTA-DR. Exempt. CBP's implementing guidance created heading 9903.05.95 for textile and apparel articles of Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua, and the additional duties do not apply to goods entered free of duty under CAFTA-DR. No duty, no surcharge.
The same tee, from the same floor, not qualifying. Your general rate, plus ten points.
Made in Pakistan. Your general rate, plus ten points. There is no textile and apparel carve-out for Pakistan.
Made in Bangladesh, Cambodia, Indonesia or Malaysia. Your general rate, plus ten points — with a promise attached, which gets its own section below.
Four columns.
One of them is zero, and it is the only one a brand can move.
The Carve-Out Has a Condition, and the Condition Is Set at the Spinning Frame
Read the exemption slowly, because the operative words are easy to skim past.
It applies to goods entered free of duty under CAFTA-DR.
Not goods made in Guatemala. Not goods shipped from Guatemala. Goods that qualify.
Which puts the entire value of that carve-out on the yarn-forward rule — the same rule that was already deciding whether your program entered duty-free.
The rule didn't change in July. Its price did.
Before July 24, failing it cost you your general duty rate. Since July 24, failing it costs you the general rate plus the surcharge, on the same goods, in the same container, out of the same cost sheet.
So the decision now carrying ten points is a yarn decision. Where it's spun, and from what. A blend doesn't automatically break it — the apparel rule is yarn-forward and sets no general fiber-origin requirement — but a yarn spun outside the region does, every time.
That decision gets made weeks before anything is cut, usually by someone who has never seen a Chapter 99 heading.
One detail worth catching. Three of the six CAFTA-DR countries — Costa Rica, the Dominican Republic and Nicaragua — sit in the twelve and a half percent tier, not the ten. They get the identical carve-out.
Which means qualifying is worth more in those three, not less.
Pakistan Pays It. You Should Hear That From Us.
We produce in Guatemala and in Pakistan.
Pakistan is in the ten percent group, and there is no textile and apparel carve-out for it. Fleece and the heavier knits coming out of Pakistan carry the surcharge.
We're putting that in writing because the alternative is you learning it from a broker in February.
What it changes, practically: the two origins stopped being interchangeable on landed cost in July. The right split between them is now a conversation about which programs need the duty treatment and which need the capability.
That question still has a good answer. It just isn't the same answer it had in June.
A Quota Is Not a Rule. Don't Book a 2027 Yarn Against One.
The fourth column holds a promise, and the promise is where most of the trade-press attention has gone.
USTR's action directs two tariff-rate quotas for Bangladesh, Cambodia, Indonesia and Malaysia — one sized to each economy's imports of US textile inputs, one sized to its imports of US cotton. Inside the quota, covered apparel would enter free of the surcharge. On October 16, USDA announced that its Foreign Agricultural Service will verify the cotton purchases.
Now the part that didn't make the headlines.
The quotas are to be established "as soon as the Trade Representative determines that it is feasible," for an initial three years, and USTR has to publish a Federal Register notice announcing them. As of this week, no such notice has published. Volumes, product coverage and verification requirements are all still unannounced. Until the quotas exist, the ten percent applies.
Hold the two instruments side by side, because they are not the same kind of thing.
CAFTA-DR gives you a rule. You satisfy it by construction, you can confirm it before the yarn is committed, and it's the same rule next season.
A quota gives you an allocation. Someone has to size it, grant it and verify it, and it's capped by volume.
You can book a yarn against a rule.
You cannot book a yarn against an allocation that doesn't exist yet.
The Best Published Duty Numbers Stop in June
One last thing, and it's how a brand ends up confident and wrong at the same time.
The strongest public measurement of what apparel importers are actually paying is a Texas Tech briefing paper released last month. It tracks effective duty — duty collected divided by customs value — and it puts cotton-dominant apparel at 13% in January 2025, a peak of 32% in January 2026, and 20% in June 2026.
June 2026 is where the series ends.
The surcharge took effect in July.
So the most authoritative duty figure available describes the quarter before the one you're costing. Benchmark against published data and you're benchmarking a world that closed on the twenty-fourth of July.
Three challenges are in front of the Court of International Trade, where a three-judge panel heard argument on September 30. Nothing has been stayed and the duties are being collected. Cost against the duty that's actually being collected, and treat any refund as a windfall rather than a plan.
Meanwhile the yarn market has its own calendar. In the week to October 29, USDA put the seven-market spot average at 74.10 cents a pound against 61.10 cents a year earlier, with domestic mills asking about delivery as far out as the fourth quarter of 2027.
Same rule. Same paperwork. Same spinning frame.
Worth ten points more than it was in June.
MTAR has spent more than two decades building full-package knit programs — tees, sweatshirts, pullover and full-zip hoodies — with CAFTA-DR compliant yarns and production in Guatemala and Pakistan, from design and development through DDP delivery to your warehouse. If you'd like your current programs read against the four columns above before you commit a 2027 yarn, let's go through them.
Questions We're Getting
Is CAFTA-DR apparel exempt from the Section 301 forced-labor tariff?
Yes, if it actually qualifies.
CBP's implementing guidance created a Chapter 99 heading, 9903.05.95, covering textile and apparel articles that are products of Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras or Nicaragua. The additional Section 301 forced-labor duties do not apply to those goods when they are entered free of duty under CAFTA-DR. For Guatemalan and Salvadoran goods there are also country-specific headings an importer may use instead.
The condition is the whole thing. The exemption attaches to goods entered duty-free under the agreement, not to goods made in a CAFTA-DR country. A garment sewn in the region on a non-qualifying yarn doesn't get it.
What is the Section 301 forced-labor tariff rate on apparel?
Ten percent for goods of the economies that committed to adopt and enforce a forced-labor import prohibition, and twelve and a half percent for the rest. It applies on top of the normal duty rate rather than replacing it, and it took effect for goods entered for consumption on or after 12:01 a.m. Eastern on July 24, 2026.
Among apparel sourcing origins, the ten percent group includes Guatemala, Honduras, El Salvador, Pakistan, Bangladesh, Cambodia, India, Indonesia, Malaysia and Sri Lanka. The twelve and a half percent group includes Costa Rica, the Dominican Republic and Nicaragua.
Rates by country change; check the current tariff schedule or your broker before costing a specific program.
Do apparel imports from Pakistan pay the Section 301 forced-labor tariff?
Yes. Pakistan is in the ten percent group and there is no textile and apparel carve-out for it, so the surcharge applies on top of the normal duty rate.
This matters for fleece and heavier knit programs in particular, since that's where a lot of Pakistan-origin volume sits. It doesn't make Pakistan the wrong answer — capability, capacity and fabric quality still decide a great many programs — but it does mean the duty comparison between a CAFTA-DR origin and a Pakistan origin moved in July, and a program costed before July is costed on old arithmetic.
When does the cotton-linked apparel tariff quota start?
Not yet, and no start date has been published.
USTR's action directs tariff-rate quotas for Bangladesh, Cambodia, Indonesia and Malaysia, sized to each economy's imports of US textile inputs and US cotton, with an initial three-year duration. USDA announced on October 16, 2026 that its Foreign Agricultural Service will verify the cotton purchases, and reporting points to a 2027 launch. USTR must publish a Federal Register notice establishing the quotas and their effective date, and as of early November 2026 no such notice has appeared. Volumes, product coverage and verification requirements are unannounced.
Until the quotas are established, the ten percent rate applies to covered apparel from those four economies. Plan on that, and treat the quota as upside rather than as a date on a calendar.