U.S. proposes fresh tariffs on 60 economies over forced labor trade practices

The Office of the U.S. Trade Representative has proposed additional tariffs of up to 12.5% on imports from 60 economies over their failure to ban goods made with forced labor, in a sweeping action that would hurt most trading partners, including China, the European Union and Japan.

The determination, made under Section 301 of the Trade Act of 1974, found that all 60 countries have failed to impose or effectively enforce a prohibition on forced labor-related imports, creating what it called an “unlevel playing field” for American workers.

USTR has proposed a 10% duty rate for economies that have adopted a full or partial prohibition on forced labor trade, and 12.5% for all other economies.

The trade authority also proposed a separate textile mechanism that would allow for a certain volume of apparel and textile imports from some economies to enter the U.S. at reduced rates. Written comments for the proposal are due by July 6, with public hearings scheduled on July 7, according to the notice.

“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,” said U.S. Trade Representative Jamieson Greer. “We will no longer tolerate this disparity.”

The proposal comes after the U.S. Supreme Court struck down most of President Donald Trump’s “Liberation Day” tariffs earlier this year, prompting him to to impose 10% global baseline duties under Section 122 — which are also set to expire in July.

The Section 301 authorizes the president to impose levies to counter unfair foreign trade practices harming U.S. commerce.

An EU spokesperson described the reasoning behind the latest barrage of U.S. tariffs as “unjustified.”

“On the EU side, we are on track to ensure implementation of our Joint Statement tariff commitments by the end of June,” they added in comments reported by Reuters.

While the Supreme Court setback helped slow down the tariff timeline, it has not “de-fanged” the president’s agenda, said Nick Marro, principal at Economist Intelligence Unit, who expects the Trump administration to unleash further investigations and tariff announcements in preparation for renewed rounds of trade talks.

The impact of proposed tariffs will, however, likely be softened by significant exemptions on goods including electronics and artificial intelligence-related products, Marro added.

While the tariff rates under Section 301 may be further adjusted, any meaningful changes will reshape global supply chains by creating different economic incentives for firms, said Deborah Elms, head of trade policy at the Hinrich Foundation.

Separately, the U.S. government also started seeking public comments Wednesday on the scope of a new U.S.-China Board of Trade — agreed by the two sides during a bilateral summit last month — which would lead to reduced tariff rates on each other’s goods. The government has also sought public opinion on non-sensitive sectors that could benefit from tariff modifications on both sides.

China might refrain from retaliating in the near term, at least regarding explicit trade restrictions, said Marro, but Beijing’s restraint is limited, especially if additional U.S. import tariffs come into play.

— CNBC’s Evelyn Cheng contributed to the report.