Source Credit : Portfolio Prints
The Office of the U.S. Trade Representative (USTR) has proposed new tariffs of up to 12.5% on imports from 60 economies, citing their failure to prohibit goods produced with forced labor. The sweeping measure would affect many of America's largest trading partners, including China, the European Union, and Japan.
The proposal follows a Section 301 investigation under the Trade Act of 1974, which concluded that all 60 economies either lack effective bans on forced labor-related imports or have failed to adequately enforce existing restrictions. According to the USTR, these shortcomings create an unfair competitive environment that disadvantages American workers and businesses.
Under the proposal, economies that have adopted full or partial restrictions on forced labor-linked trade would face a 10% tariff, while those without such measures would be subject to a higher 12.5% rate.
The agency also unveiled a separate textile framework that would permit a limited volume of apparel and textile imports from selected economies to enter the United States at reduced duty rates.
"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. "American workers should not be forced to compete on a global playing field tilted by unfair labor practices. We will no longer tolerate this disparity."
The announcement comes months after the U.S. Supreme Court struck down much of President Donald Trump's "Liberation Day" tariff program, prompting the administration to rely on alternative trade authorities. Earlier this year, Trump imposed a 10% global baseline tariff under Section 122, though those duties are scheduled to expire in July.
Section 301 grants the president broad authority to impose tariffs and other trade remedies in response to unfair foreign trade practices deemed harmful to U.S. commerce.
While the Supreme Court's ruling delayed portions of the administration's tariff agenda, it has not fundamentally weakened its trade strategy, according to Nick Marro, principal economist at the Economist Intelligence Unit. Marro expects the administration to launch additional investigations and tariff actions ahead of a new round of trade negotiations.
However, the economic impact of the proposed measures could be moderated by extensive exemptions for products such as electronics, semiconductors, and artificial intelligence-related technologies, he noted.
The USTR has invited public comments on the proposal through July 6, with hearings scheduled for July 7.
Trade experts say the final tariff structure remains subject to revision, but even modest changes could significantly alter global supply chains. Deborah Elms, head of trade policy at the Hinrich Foundation, said differentiated tariff rates would create new incentives for companies to reconsider sourcing decisions, production networks, and investment strategies.
In a separate development, the U.S. government has opened a public consultation on the scope of a proposed U.S.-China Board of Trade, an initiative agreed upon during a bilateral summit last month. The framework is expected to facilitate lower tariff rates on certain goods traded between the world's two largest economies. Officials are also seeking feedback on non-sensitive sectors that could benefit from targeted tariff reductions.
China is unlikely to respond immediately with direct trade retaliation, Marro said, particularly as both sides explore avenues for renewed economic engagement. Nevertheless, Beijing's willingness to exercise restraint may diminish if Washington moves ahead with additional tariffs in the months ahead.
