News / US plans new tariffs for EU, UK and others for lack of action on forced labour

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Australia, the EU, and the UK are not doing enough to end the use of forced labour in global supply chains, according to the US, which has announced plans to hit all three with President Trump’s favoured trade tool.

Together with 57 other countries, they are facing a new, additional tariff rate of 10% to 12.5% on all goods for “either failing to introduce or failing to properly impose legislation prohibiting the trade in goods that have benefited from forced labour at some point”.

US trade representative Jamieson Greer said: “The failure of our most important trading partners to address the import of goods made with forced labour… creates a dynamic where American workers are forced to compete globally on an unlevel playing field.

“We will no longer tolerate it.  Some trading partners have taken initial steps to prevent the import of forced labour goods.  However, each of our trading partners must do more to ensure trade does not perversely encourage and entrench forced labour globally.”

Having seen its unilateral – without Congressional approval – application of the IEEPA (International Emergency Economic Powers Act) tariffs struck down by the Supreme Court in February, the White House has been looking at other ways to impose them.

A USTR investigation determined that Australia and the UK would be subjected to a 12.5% rate for failing to push through laws to address forced labour practices, joining 52 other affected countries, including China, Japan, and India.

Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan have all been flagged as introducing but failing to properly enforce legislation resulting in the “unlevel playing field”.

Chair of the European Parliament’s Committee on International Trade Bernd Lange noted that, “even though this was to be ​expected, the investigation and its findings are utterly absurd”.

He added: “Following the setback at ​the Supreme Court, the US government is desperately seeking a new legal basis for its ​tariff policy. It appears that every conceivable pretext is now being used to justify existing tariffs or prepare new ones.”

Legislation banning the import of goods using forced labour at any point in the supply chain has been ratified by the EC, but the USTR report has hung its hat on the fact this does not come into force until December 2027.

EU spokesperson Olof Gill said: “The commission will carefully analyse the findings of the investigation and will continue engaging with the US. That said, the EU considers tariffs imposed on these grounds to be unjustified.”

Given that the president’s IEEPA tariffs and the subsequent 10% flat tariff rate on all trading partners were shot down in court, albeit the latter remaining in place throughout the appeals process, questions will be raised as to the legality of the latest move.

However, having been reached through a Section 301 investigation, which is designed to address unfair foreign practices affecting US commerce, the USTR has broader powers to impose tariffs for “acts deemed unreasonable or discriminatory” towards US interests.

And it comes on the back of yesterday’s news that a similar 301 investigation could lead the USTR to slapping Brazil with a 25% tariff, over claims it has engaged in “multiple practices” that “are unreasonable, and burden or restrict US commerce”.

Like that proposal, those caught up in the “forced labour” tariff announcement need not fret straight away, the issue remaining a proposal ahead of hearings the USTR will hold on 7 July, as it requests comments no later than 6 July, and ideally by 22 June.