The Trump administration's new tariffs on around 60 trading partners took effect at 12:01 am local time on July 24, drawing an immediate legal challenge from two US small businesses and strong criticism from multiple countries. They also follow a recent warning from the International Monetary Fund (IMF) regarding their impact on global growth.

The new tariffs, ranging from 10% to 12.5%, were imposed under Section 301 of the Trade Act of 1974, targeting economies including China, Japan, Australia, Brazil and the European Union over forced labor concerns. The measures cover approximately 99.4% of US imports from the investigated economies.

Hours after the tariffs took effect, two US small businesses — Burlap & Barrel, a New York-based online spice retailer, and Collective Horology, a California-based watch retailer — filed a lawsuit in the US Court of International Trade, challenging the administration's legal authority to impose the sweeping duties.

Multiple countries have voiced strong opposition. Australian Deputy Prime Minister and Defense Minister Richard Marles said the new tariffs "make no sense," while Trade Minister Don Farrell said they were "unjustified, inconsistent with the Australia-US free trade agreement and should be removed." Brazil rejected the US decision, calling the Section 301 investigation "arbitrary and unjustified," and said it would immediately initiate procedures to bring the matter to the WTO dispute settlement mechanism. 

Japan's Chief Cabinet Secretary Minoru Kihara said Tokyo "regrets" the new tariffs, stating that "Japan's industry and trade are conducted in accordance with international rules" and that the measure imposes tariffs on Japan "solely on the grounds that there is no ban on the import of products produced through forced labor."

The IMF, in its July 2026 World Economic Outlook Update released on July 8, projected global growth at 3.0% for 2026 — a downward revision of 0.1 percentage points from its April forecast. Global trade volume growth is projected to slow sharply from 5.0% in 2025 to 3.5% in 2026, the IMF said, warning that if trade fragmentation triggers more economies to adopt protectionist measures such as tariff hikes, it would "seriously hurt global output and further push up prices."

IMF Chief Economist Pierre-Olivier Gourinchas whose term ended at the start of July had warned that unilateral trade measures could trigger a chain reaction. "The risk is that we fall into a world of successive retaliatory actions, where countries constantly seek to exploit small advantages, but ultimately harm the overall system," he said.