Governments Make Their Case Against Section 301 Forced Labor Tariffs
Last month, USTR made a determination in its Section 301 investigation into "Acts, Policies, and Practices of Various Economies Related to the Failure To Impose and Effectively Enforce a Prohibition on the Importation of Goods Produced With Forced Labor." As Desiree LeClercq told us, the USTR report "finds that all 60 economies under investigation, including the European Union, Canada, and Mexico, either failed to effectively enforce a forced labor prohibition or failed to impose any legal prohibition on the importation of goods produced wholly or in part with forced labor." USTR then proposed the following tariff action in response:
For economies that impose a forced labor import prohibition—Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan; for economies that have undertaken commitments in their respective Agreements on Reciprocal Trade regarding forced labor import prohibitions—Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, Guatemala, Indonesia, Malaysia, and Taiwan; and economies that have imposed a partial regime with the effect of preventing the importation of certain forced labor goods—the United Kingdom; the Trade Representative proposes additional duties of 10% for products of these economies. For all other economies that have failed to impose and effectively enforce a forced labor import prohibition, the Trade Representative proposes 12.5% as the rate of additional duties.
In response to USTR's proposed tariff action, the governments of the affected economies (and the general public as well) had the opportunity to make their case against the tariffs. USTR invited comments on several specific issues, including this one:
• Whether different tariff rates should be applied to an economy where the economy has made a commitment to the United States to impose and enforce a forced labor import prohibition; has imposed a forced labor import prohibition; or has imposed a partial regime with the effect of preventing the importation of certain forced labor goods.
Written comments were due by July 6 and can be found here (there are 1518 of them!). A hearing was held on July 7 through 9. (The day 1 transcript is here; I will add links to the other transcripts when they are available.) [Update: Day 2; Day 3).
It seems to me that, as part of this comment/hearing process, affected governments could make one or both of the following arguments: (1) USTR got things wrong in the assessment of the government's laws/enforcement related to imports made with forced labor, and (2) since the USTR report was issued, the government has taken new actions in this area. On this basis, a government could argue that USTR should reconsider the proposed tariff in relation to its exports.
Canada's situation is particularly interesting, as there has been some movement in that country on new forced labor legislation. At a recent Parliamentary committee meeting on this issue, various Canadian government officials discussed Bill C-35, "An Act respecting the prohibition of the importation of goods produced by forced labour," which was introduced in Parliament in June. In its comments on USTR's proposed tariff action, Canada used these developments to argue as follows:
Canada has established a robust framework to prevent goods produced with forced labour from entering the Canadian market, while continuing to strengthen its enforcement tools and activities.
Building on this commitment, on June 12, 2026, the Government of Canada introduced Bill C-35, An Act Respecting the Prohibition of the Importation of Goods Produced by Forced Labour. This new legislation will strengthen Canada’s ability to identify, intercept and prohibit goods linked to forced labour at the border, while providing certainty and transparency for businesses operating in or trading with Canada.
...
In light of Canada’s existing prohibition, complementary supply chain transparency measures, newly introduced standalone forced labour import legislation and continued commitment to Canada-U.S. cooperation, Canada respectfully submits that there is no basis for the imposition of additional Section 301 duties on Canadian goods. Canada further submits that preserving the current treatment of goods that comply with the Canada-United States-Mexico Agreement would maintain consistency with our shared trade commitments.
Canada is raising these points in its comments on USTR's proposed action. If the changes to its forced labor regime don't get Canada a lower tariff rate in the final action, it will be interesting to see what steps it takes going forward. The process under the Section 301-310 provisions to account for changes to unfair trade practices seems murky to me, but I would think there's an argument that as part of its final tariff action in this investigation, USTR should take into account in some way recent efforts related to forced labor imports by the governments of the affected economies, with an explanation of why these efforts did or did not lead to an adjustment to the proposed tariff.
And then if the Canadian legislative efforts are successful in the coming months, and Bill C-35 becomes law, will USTR take that into account in setting its tariff for Canadian imports? Canada is at a 10% tariff under the proposed action. Assuming this tariff is maintained in the final action, could passage of the new legislation force USTR to take another look, and get Canada a lower rate? And what if implementation of the legislation makes Canada's forced labor import regime as good as, or even better than, the U.S. system? Would that lead to a zero tariff?
Here are the comments of a couple other governments who are also trying to make the case that their recent efforts should help their cause with regard to these Section 301 tariffs:
The Government of Japan has been faithfully and swiftly implementing the agreement between Japan and the United States of July 2025 and calls on the U.S. Government once again to duly recognize these efforts by Japan and take appropriate actions.
The Interministerial Regulation on the Prohibition on Imports of Goods Linked to Forced Labor, which is jointly administered and enforced by the three primary competent ministries as enclosed herein1 became effective on 1 July 2026 and explicitly provides that “[t]he import, use, circulation, or supply of goods linked to forced labor within the Kingdom of Cambodia are prohibited.”2
1 Following the constructive and substantive consultative meeting with the Section 301 Committee on Forced Labor held on 15 May 2026 in Washington, D.C., the Royal Government of Cambodia meticulously considered the Committee's observations and relevant international practices. In response, the Royal Government of Cambodia adopted the Interministerial Regulation (a.k.a Prakas) No. 450 MEF.PrK dated 01 July 2026 on the Prohibition on Imports of Goods Linked to Forced Labor, establishing a coordinated regulatory framework to address the importation of goods produced with forced labor. This Interministerial Regulation is jointly administered and enforced by the three primary competent ministries, namely the Ministry of Economy and Finance, the Ministry of Commerce, and the Ministry of Labour and Vocational Training.
2 Articles 7 and 8 of the aforementioned Interministerial Regulation provide that where imported goods are found to be linked to forced labor, their importation, use, circulation, and supply within Cambodia shall be prohibited. Where the importer is found to have imported such goods, administrative sanctions shall be imposed, including the suspension of import and export activities, the suspension of the issuance of Certificates of Origin, and other measures in accordance with applicable laws and regulations.
Here are some links to the comments of other governments: Australia; Brazil; Chile; Colombia; Costa Rica; Ecuador; El Salvador; Guatemala; India; Indonesia; Kazakhstan; Malaysia; Morocco; New Zealand; Nigeria; Norway; Pakistan; Peru; Singapore; South Korea; Taiwan; Thailand; Uruguay; and Viet Nam.
And the following governments made requests to appear at the hearing: Chile; Ecuador; Guatemala; Guyana; Honduras; India; Jordan; Kazakhstan; Malaysia; Mexico; Pakistan; Peru; South Africa; South Korea; Sri Lanka; and Viet Nam.