United States Economy Hit by New Tariffs on 60 Trading Partners Over Forced Labour

The United States economy faces new tariffs of 10% to 12.5% on goods from 60 trading partners including Switzerland, the European Union, China, Japan, South Korea and the United Kingdom that took effect on Friday, citing inadequate efforts to combat forced labour in supply chains, just as a temporary 10% global tariff expired. [1] [2]

New Tariffs Take Effect

The tariffs took effect at 6:01am in Switzerland on Friday, replacing the temporary 10% tariff that expired at the same moment after lasting 150 days. [1] These new duties cover 99.4% of U.S. imports but exempt oil and gas, fertilizer, certain foodstuffs, autos, steel, aluminum, copper, aircraft, critical minerals and goods complying with the US-Mexico-Canada Agreement. [2] Goods in transit received an exemption until 12:01 a.m. EDT on July 28. [3] The measures apply to a number of products entering the United States from the targeted partners. [1]

Rationale and Legal Basis

U.S. Trade Representative Jamieson Greer stated that decades of moral suasion have failed to eradicate forced labour and that trading partners must match the United States’ nearly century-old forced labour import ban. [1] Greer added that the action will begin to correct what is both a human rights abuse and distortive trade practice to improve the welfare of workers everywhere. [2] The tariffs were imposed under Section 301 of the Trade Act of 1974 following an investigation launched in mid-March to determine whether trading partners had eliminated forced labour from their supply chains. [1] This legal basis allows the administration to maintain a tariff floor on virtually all U.S. imports with reduced legal risk compared to earlier measures. [2]

Country-Specific Rates

Rates vary with 10% applied to countries including Britain, Canada, Mexico and India while 12.5% applies to Switzerland, China, Japan, South Korea and about 38 others, with some combined with existing most-favored-nation rates to reach those levels. [1] [2] The European Union, Taiwan, Japan, South Korea and Switzerland received rates that combined with pre-existing most-favored-nation tariff rates totaled 10% or 12.5%. [3] China faces the new 12.5% tariff added on top of existing import taxes without preferential treatment. [5] Some items already subject to tariffs of 12.5% or higher in Japan and South Korea are exempted from the new measure. [5]

International Reactions

Affected countries including the EU, Switzerland, Australia, Brazil, Norway and Japan protested the tariffs as unjustified. [1] [2] The Swiss government rejected allegations of forced labour while business groups warned of competitive disadvantages. [1] European Union foreign policy chief Kaja Kallas said the bloc viewed the new tariffs as a shock and that Washington’s rationale did not make sense given European labor laws. [2] Norway’s Foreign Minister Espen Barth Eide stated there is no basis for the tariff against Norway because clear rules already prevent trade in goods produced using forced labor. [3] Australia’s trade minister Don Farrell described the tariffs as unjustified and inconsistent with free trade agreements. [4]

Context of Prior Tariff Actions

The new duties replace a temporary 10% tariff introduced for 150 days after the Supreme Court struck down most of President Donald Trump’s earlier reciprocal tariffs in February. [1] The temporary tariff had been imposed under Section 122 of the Trade Act of 1974. [5] Shortly before this round of tariffs, the U.S. government announced surcharges on Brazil at 25% on nearly half of its exports and on Canada at an additional 50% on $20 billion worth of goods. [1] [2] The administration has also launched separate investigations into possible industrial overcapacity in 16 economies. [1]

Potential Legal and Economic Impact

Expert views note reduced legal risk under Section 301 because it has withstood past challenges and provides flexibility to adjust duties while maintaining a 10% baseline. [2] Concerns include higher costs for U.S. businesses and consumers along with weakened American competitiveness. [3] The measures are intended to keep the 10% baseline in place with stronger protection against court challenges. [2] A senior Trump administration official stated that the United States has stronger import bans on goods made with forced labor and enforces them more rigidly than any other country. [2]

What to watch next includes ongoing investigations into industrial overcapacity in 16 economies that could lead to additional duties and further adjustments to tariff rates under existing trade pacts.