US cites forced labour concerns as grounds for new tariffs

The administration of US President Donald Trump has proposed new tariffs of up to 12.5 percent on imports from 60 economies after determining they had failed to curb trade in goods made with forced labour, an assertion that was rejected by US trading partners.

The proposal from the Office of the United States Trade Representative (USTR), issued late on Tuesday, comes from a Section 301 unfair trade practices investigation designed to help rebuild US President Donald Trump’s emergency tariffs, struck down by a US Supreme Court decision in February.

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Despite laws banning them, the products of forced labour are deeply embedded in supply chains across the world. European lawmakers bristle at the accusation that the region is less effective than the US at curbing the trade in such goods, with one describing the US findings as “utterly absurd”. Business leaders said the US move created more confusion for companies.

The USTR proposed 10 percent additional duties on imports from Canada, Ecuador, the European Union, Indonesia, Mexico, Pakistan, Argentina, Bangladesh, Cambodia, El Salvador, Guatemala, Malaysia, Taiwan and Britain. The USTR said all had plans or partial schemes in place.

The trade agency said it would impose additional duties of 12.5 percent on the remaining 45 countries that it investigated. These include China, India, Nigeria, Japan, South Korea, Vietnam, Australia and New Zealand.

“The failure of our most important trading partners to address the importation of goods made with forced labour is unacceptable,” US Trade Representative Jamieson Greer said in a statement. “This creates a dynamic where American workers are forced to compete globally on an unlevel playing field.”

The USTR said it would accept public comments on the proposed tariffs and other remedies through July 6, with a public hearing scheduled for July 7.

The announcement comes ahead of the July 24 expiration of a 10 percent temporary tariff imposed by the Trump administration on February 20, the day the Supreme Court struck down Trump’s tariffs under the International Emergency Economic Powers Act. It also shows how determined the Trump administration is about building a wall of tariffs around the US economy, the world’s largest, despite repeated setbacks in court.

After the loss in the Supreme Court, Trump turned to another law to impose temporary 10 percent tariffs globally. But those stopgap levies expire July 24. And a specialised trade court ruled last month that they, too, were illegal – though the government can continue collecting them while that case works its way through the courts.

Unjustified tariffs

The European Commission said the tariffs were unjustified and reiterated its commitment to the trade deal sealed with Washington last year.

Bernd Lange, the chair of the European Parliament’s trade committee, which voted on Tuesday to accept that trade deal, said the new tariffs were expected, but said the results of the US investigation were still “utterly absurd” given a 2024 EU law to ban imports of forced labour products.

“The impression is increasingly emerging that a tariff measure is sought first, and only then is a suitable legal justification found,” he said. However, he added that the key question would be whether the additional tariffs would exceed those agreed between both sides last July.

The US’s largest trading partner, the EU, agreed last July to accept tariffs of 15 percent on a broad range of its exports. In its report, the USTR said the EU anti-forced labour measures only came into force in December 2027 and lacked key elements.

It was unclear whether the proposed tariffs – which the US release described as “additional duties” – would come on top of levies agreed in bilateral deals signed with the US.

Britain said it was in regular talks with the US and was taking action to tackle forced labour. It added that the preferential access to US markets that it had negotiated for UK businesses remained in place.

Mexico said that goods that were compliant under the United States-Mexico-Canada Agreement (USMCA) would be exempt from the new tariffs.

Taiwan said it was “hopeful and confident” that the final results would reflect agreements already reached, securing relatively preferential treatment.

Beijing, facing 12.5 percent tariffs, said that it opposed all forms of unilateral tariffs and that there was no forced labour in China. India, confronted with the same rate, said it was engaged with Washington on the Section 301 proceedings, noting the proposed tariffs were not final.

“There will be deep concerns in the international business community that the US [forced labour law could] become a global template,” said Andrew Wilson, deputy secretary general of the International Chamber of Commerce.

“Anyone can make a claim, get a shipment impounded and the company has to prove no forced labour in supply chain.”

Certain exemptions

The USTR said it would exempt from tariffs products including energy, rare earths and some other metals, beef, coffee, certain fruits and vegetables, pharmaceuticals, organic chemicals and aircraft parts.

It also said it was proposing a textile mechanism that would allow for a certain volume of apparel and textile imports to enter the US at a reduced tariff rate, without giving details.

The ICC’s Wilson said the list of exemptions, stretching for more than 76 pages, suggested sensitivities over the potential cost-of-living hit to food and other goods with known forced-labour risks.

“It doesn’t make sense if the object of this is to enhance controls on modern slavery,” he said.