The Trump administration is hurtling forward in rebuilding its tariff strategy as an accelerated probe into dozens of American trading partners over claims of forced labor concludes—though apparel and textile products may be spared from the most punishing new duties.
On Tuesday, the Office of the United States Trade Representative (USTR) announced that the investigation into 60 global economies launched under Section 301 of the Trade Act of 1974 in March has yielded evidence that the U.S.’ most prominent import and export markets have failed to impose or effectively enforce bans on the importation of goods produced with forced labor.
Their acts, policies and practices related to the issue create risks that burden or restrict U.S. commerce, the federal government’s trade arm said in a statement. Now, they will face new punitive tariffs ranging between 10 percent and 12.5 percent.
“The failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable. This creates a dynamic where American workers are forced to compete globally on an unlevel playing field,” USTR Ambassador Jamieson Greer said upon the release of the investigation’s findings. “We will no longer tolerate this disparity.”
Argentina, Bangladesh, the United Kingdom, Cambodia, Canada, Ecuador, El Salvador, the European Union, Guatemala, Indonesia, Malaysia, Mexico, Pakistan and Taiwan will see 10 percent tariffs due to what the USTR characterized as a failure to effectively enforce existing prohibitions on forced labor. Meanwhile, 45 countries including production and export powerhouses like China, India and Vietnam, along with South Korea, Australia, Canada, and countries across Africa, the Middle East and Latin America, will face heftier 12.5 percent duties.
According to Greer, some of the economies targeted by the probe, like Mexico, the EU and the U.K., “have taken initial steps to prevent the importation of forced labor goods, including through USMCA and commitments in Agreements on Reciprocal Trade,” and that is why they face the lower rate.
“However, each of our trading partners must do more to ensure that trade does not perversely encourage and entrench forced labor globally,” he added.
The new duties will apply to “all products of the investigated economies,” though certain goods will face exceptions. The USTR explicitly proposed creating a mechanism to exclude a yet-undisclosed volume of apparel and textile imports from specific countries to enter the country at a reduced tariff rate.
The new tariffs are set to take effect following hearings about the proposed actions on July 7. Requests to appear at the hearings are due on June 22, while written comments are due by July 6.
The Section 301 duties will come into play just as the administration’s global 10 percent duties, levied under Section 122 of the Trade Act of 1974, sunset on July 24—and that timing was not an accident. President Donald Trump leveraged the trade provision, which has to do with balance-of-payments issues, shortly after the Supreme Court struck down his original tariff scheme, which was levied under the International Emergency Economic Powers Act (IEEPA).
But the Section 122 duties have also faced considerable legal challenges, with the Court of International Trade ruling in early May that the tariffs, like the IEEPA duties they were deployed to replace, are unlawful. The Trump administration was granted a stay of the enforcement pending a final judgment, meaning that Customs and Border Protection (CBP) can continue to collect the tariffs while the case goes through the appeals process.
CBP began dispersing refunds on the IEEPA tariffs in April following the launch of a new electronic request and refund management system created specifically for the task—but the government is appealing that court decision, too, saying it shouldn’t have to dispense refunds to anyone but the plaintiffs in the case. As of last week, about $85 billion in potential and certified refunds had been accepted for processing and $20.6 billion sent to the U.S. Treasury for disbursement.
