US proposes 10–12.5% tariffs on 60 economies over forced labour imports, from EU to Japan

The United States has proposed a new wave of tariffs targeting 60 economies, a move that marks the Trump administration's most significant push to rebuild its protectionist trade wall since the Supreme Court struck down earlier blanket duties. The Office of the US Trade Representative (USTR) announced the proposal on Tuesday, following investigations under Section 301 of the Trade Act of 1974.

The two-tier penalty

The proposed levies are split into two rates. A 12.5% tariff would apply to imports from economies that the USTR determined have "failed to impose and effectively enforce a prohibition on the importation of goods produced with forced labor." This group includes China, India, Japan, South Korea, Brazil, Switzerland, and Australia. A lower 10% rate targets economies that have prohibitions on the books or have committed to them but are deemed to have enforced them inadequately. Canada, Mexico, the European Union, Taiwan, and the UK fall into this second category.

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. We will no longer tolerate this disparity.

Reactions from targeted nations

Australia pushed back sharply against the finding. A spokesperson for Trade Minister Don Farrell stated that Australia has "robust, comprehensive and world-leading legislation addressing forced labour and modern slavery" and called any tariffs "unjustified and inconsistent with our free trade agreement." The Australian government is seeking urgent clarification from US officials and plans to use a public comment period, open until 6 July, to press for an exemption.

India's Commerce Ministry did not immediately respond to a request for comment. Trade expert Ajay Srivastava noted that the US investigation focuses not on forced labour in Indian exports but on imports into India that are linked to forced labour elsewhere. The USTR report identifies India as an intermediary in cotton supply chains connected to Chinese forced labour.

Legal and economic context

The proposal arrives at a delicate moment for the global economy. Financial markets are already on edge over the Iran war and a resulting spike in oil and gas prices, which have fuelled inflation fears and exacerbated affordability concerns among US voters ahead of November's midterm elections. Equities remained higher after the announcement, with the MSCI All Country World Index rising 0.1% to a record.

The new duties are the product of Section 301 investigations launched in March, a separate legal authority from the earlier reciprocal tariffs that the Supreme Court rejected in February. A separate blanket 10% tariff imposed worldwide under Section 122 of the Trade Act is set to expire on 24 July. Trade analysts are speculating whether future duties from a parallel 301 probe into excess manufacturing capacity could be stacked on top of the forced labour tariffs.

Trade partners will be understandably upset by this determination. You've opened a door now for a whole lot of new tariff and non-tariff adjustments.

What comes next

The levies will not take effect immediately. They are subject to a public comment and review period before implementation, which could result in changes before any duties are codified. Written comments are being accepted until 6 July. The USTR has not indicated a date for when the tariffs would be introduced.