US cites forced labor concerns as grounds for new tariffs

By David Lawder, Anusha Shah and Philip Blenkinsop

WASHINGTON, June 3 (Reuters) – The Trump administration has proposed tariffs of up to 12.5% on imports from 60 countries after determining they had failed to curb trade in goods made with forced labor, an assertion that U.S. trading partners rejected.

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 the U.S. Supreme Court in February.

Despite laws banning them, products of forced labor are deeply embedded in global supply chains. Business leaders said the U.S. move created more confusion for companies trying to police the sources of products.

“Forced labor concerns all countries and is happening in every sector. No one country is completely exempt — including the U.S.,” Helene de Rengerve, a corporate responsibility official at Human Rights Watch, said. “Singling out some countries just based on trade volumes is questionable and may even be counterproductive.”

U.S. PROPOSES ADDITIONAL 10%, 12.5% DUTIES

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 plans in place, or had committed to addressing forced labor as part of U.S. trade agreements.

The trade agency said it would impose additional 12.5% duties 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, adding it created unfair competition for U.S. workers.

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 new tariffs were proposed with numerous exemptions, including for imports already subject to U.S. Section 232 national security tariffs, such as autos, steel, aluminum and copper products. The tariffs will not apply to Canadian and Mexican imports that comply with the North American trade deal rules of origin.

The proposal also lists 76 pages of specific product exemptions, including crude oil and petroleum products, rare earths and other specialty metals, beef, coffee, certain fruits and vegetables, pharmaceuticals, organic chemicals and aircraft parts.

Canadian Prime Minister Mark Carney said Canada shares U.S. objectives in rooting out forced labor but noted that Canadian products were largely protected from new duties by the exemptions.

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 that capped the U.S. tariff rate on most EU goods at 15%.

Bernd Lange, who chairs the European Parliament’s trade committee, which voted on Tuesday to accept that trade deal, said the results of the U.S. investigation were “utterly absurd” given a 2024 EU law to ban imports of forced labor products. 

Greer, in Paris to attend an OECD ministerial meeting, told France 24 TV that the U.S. and EU were “committed to compliance with the trade agreement.”

In its report, the USTR said the EU anti-forced labor measures only come into force in December 2027 and lack 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 the preferential access to U.S. markets 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 said it opposed all unilateral tariffs and that there was no forced labor in China. India said it was engaged with Washington on the Section 301 proceedings.

“There will be deep concerns in the international business community that the U.S. (forced labor 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 labor in the supply chain.”

He said the long list of exemptions suggested sensitivities over the potential cost-of-living hit to food and other goods with known forced-labor risks.

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

(Reporting by Anusha Shah in Bengaluru, David Lawder in Washington Philip Blenkinsop in Brussels; Elizabeth Pineau in Paris; Josephine Mason in London; Olivia Le Poidevin in Geneva; David Ljunggren in Ottawa; Editing by Jacqueline Wong, Thomas Derpinghaus, Hugh Lawson, Andrea Ricci, Rod Nickel)