Washington Proposes Forced-Labor Tariffs on 60 Economies, Reviving a Broad Duty Regime

The Office of the United States Trade Representative (USTR) proposed additional tariffs of 10 to 12.5 percent on goods from 60 economies, accusing them of failing to ban or enforce a prohibition on imports made with forced labor. The action, taken under Section 301 of the Trade Act of 1974, reaches most of the United States' largest trading partners, including China, Japan, India, South Korea, Brazil, Switzerland and the 27 members of the European Union.

Economies with partial bans would face a 10 percent duty, and those without effective enforcement would face 12.5 percent, according to the USTR determination. China, Japan, India, South Korea, Brazil and Switzerland are set for the higher rate, while Canada, Mexico, Taiwan and the United Kingdom would face 10 percent. The agency said it would exempt energy, rare earths, certain metals, pharmaceuticals, beef, coffee and aircraft parts, and would take public comments through July 6 ahead of a July 7 hearing.

Brazilian President Luiz Inácio Lula da Silva rejected the premise outright, arguing that Washington runs a trade surplus with Brazil, not the other way around, and that by the United States' own logic Brazil would be the party entitled to impose duties.

In terms of monetary policy, the proposal is another step toward rebuilding a broad set of tariffs after an earlier set was struck down in court. It adds a tax on imported goods that producers and households ultimately pay. Duties this broad tend to raise input costs across supply chains and reinforce the same price pressures that central banks say they are trying to reduce, even as the stated justification shifts from trade balances to labor standards.