US cites forced labor concerns as grounds for new tariffs

On Monday, the USTR proposed a 25% duty on many Brazilian goods as a result of a Section 301 investigation into the country's digital trade practices and preferential tariffs. The trade agency is also expected to ⁠soon unveil the findings of another major Section 301 probe into ⁠the buildup of excess industrial capacity in 16 trading partners, including China and the European Union.

The Trump administration has proposed new tariffs of up to 12.5% on imports from 60 economies after determining they had failed to curb trade in goods made with forced labor, an assertion that was rejected by its trading partners. The proposal from the U.S. Trade Representative's office, issued late on Tuesday, comes from a Section 301 unfair trade practices ‌investigation designed to help rebuild U.S. President Donald Trump's emergency tariffs, struck down by a U.S. Supreme Court decision in February.

Despite laws banning them, the products of forced labor are deeply embedded in supply chains across the world. But European lawmakers in particular bristle at the accusation that the region is less effective than the U.S. at curbing the trade in such goods, with one describing the U.S. findings as "utterly absurd". The USTR proposed 10% 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% 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 labor is unacceptable," U.S. 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.

EUROPE SAYS NEW TARIFFS ARE UNJUSTIFIED The announcement comes ahead of the July 24 expiration of a 10% 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. 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 U.S. investigation were ⁠still "utterly absurd" given a 2024 EU law to ban imports of forced labor 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 U.S.'s largest trading partner, the European Union, agreed last July to accept tariffs of 15% on a broad range of its exports. In its report, the USTR said ⁠the EU measures only came into force in December 2027 and lacked key elements.

"We know there are ups and downs in what people say," French Finance Minister Roland Lescure told reporters after a cabinet meeting. "But the goal is to ratify the (trade) accord and stick to that." Britain said it was in regular talks with ⁠the ​United States and was taking action to tackle forced labor. It added that the preferential access to U.S. markets that it had negotiated for UK businesses remained in place. Taiwan said it was "hopeful and confident" that the final results would reflect agreements already reached, securing relatively preferential treatment. Beijing, facing 12.5% tariffs, said that it opposed all forms of unilateral tariffs and that there was no forced labor 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. On Monday, the USTR proposed a 25% duty on many Brazilian goods as a result of a Section 301 investigation into the country's digital trade practices and preferential tariffs.

The trade agency is also expected to ⁠soon unveil the findings of another major Section 301 probe into ⁠the buildup of excess industrial capacity in 16 trading partners, including China and the European Union. In the forced labor findings, 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 ‌U.S. at a reduced tariff rate, without giving details.