U.S. Seeks New Section 301 Tariffs in Forced Labor Flap

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Written by John Egan for IIR News Intelligence (Sugar Land, Texas)

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Summary

Numerous overseas economies and trade groups blasted the results of a Section 301 trade investigation by the U.S. Trade Representative, which concluded that the actions of 60 overseas economies placed U.S. exports at a competitive disadvantage. But the proposal also drew support from some U.S. trade groups.

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Trump Administration Launched Numerous Section 301 Investigations

On February 20, the U.S. Supreme Court ruled that President Donald Trump exceeded his authority in imposing tariffs on imported goods under the International Emergency Economic Powers Act (IEEPA) of 1977. For more on that, see February 20, 2026, article - Supreme Court Rejects Trump Tariffs under IEEPA.

The same day the high court announced its decision, the U.S. Trade Representative (USTR) said it was initiating a series of investigations into the trade practices of overseas economies under Section 301 of the Trade Act of 1974. These investigations sought to remedy unfair trade practices, generate tariff revenue streams and replace the estimated $166 billion, plus interest, that the court ruled had been unlawfully collected under IEEPA.

The law firm WilmerHale noted that these Section 301 investigations would cover a broad range of economic activities, including:

• Whether foreign economies imported goods produced with forced labor
• Whether other economies maintained excess industrial capacity for the purpose of driving down prices
• Pharmaceutical pricing practices
• Alleged discrimination against U.S. technology companies and digital goods and services
• Digital services taxes
• Ocean pollution
• Practices related to the trade in seafood, rice and other products.

The far-reaching scope of these investigations could affect many, if not all, of the industries covered by Industrial Info Resources.

By the Numbers

• 60: Number of overseas economies that the Trump administration has asserted import goods produced by countries engaging in forced labor, which disadvantage U.S. companies, according to a report from the USTR.
• 10% to 12.5%: The level of tariffs proposed by the USTR on 60 overseas economies, including the largest U.S. trading partners, because those economies allegedly import goods from countries that tolerate, to one degree or another, the use of forced labor. This asserted practice, which is disputed by overseas economies, is said to disadvantage U.S. exporters.

USTR Proposed Tariffs to Fight Imports of Goods Made with Forced Labor

On June 2, the USTR announced the results of its first Section 301 investigation. It found that all 60 overseas economies it examined either failed to have laws prohibiting the importation of goods made with forced labor, or failed to enforce existing laws on that issue. The report did not claim any of the 60 nations maintained forced or slave labor camps.

These 60 countries are trade partners that account for more than 99% of goods imported from the U.S.

"The failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable," said Jamieson Greer, the USTR, in a June 2 statement.

"This creates a dynamic where American workers are forced to compete globally on an unlevel playing field," he continued. "We will no longer tolerate this disparity."

To remedy the situation, the USTR proposed different levels of tariffs on imports from those 60 economies:

• A 10% tariff on imported goods from 14 economies that, the USTR asserted, failed to enforce laws on their books that prohibit importing goods made with forced labor. This tariff would apply to some of the largest U.S. trading partners, including Canada, Mexico, Taiwan and the United Kingdom (UK), though numerous exceptions have been proposed by USTR.
• A 12.5% tariff on 46 economies that the agency claimed do not impose and effectively enforce a ban on imports of goods made with forced labor. This proposed tariff would be applied to other large U.S. trading partners, including China, Vietnam, South Korea, Japan and India. Again, numerous exemptions were proposed by the trade office.

A third tariff of 25% was applied to imports from Brazil, which would be added to the 12.5% tariff USTR proposed.

The proposal also seeks to exempt more than 1,000 types of goods from the proposed tariffs, a list that ran to 67 pages, which could shield several industries tracked by Industrial Info Resources. The categories of proposed exemptions include:

• Crude oil, refined petroleum products, natural gas, natural gas liquids and electricity, which would shield the Oil & Gas Production, Petroleum Refining and Electric Power industries
• Coal, rare earth elements, critical minerals, base metals, other specialty metals and various types of steel and iron products, exempting most categories in the Metals & Minerals Industry
• Beef, coffee, tea, spices, juices, nuts and certain fruits and vegetables, protecting the Food & Beverage Industry
• Various types of wood and wood products, which are part of the Pulp, Paper & Wood Industry
• Pharmaceuticals, shielding the Pharmaceutical & Biotech Industry
• Organic chemicals, one of many categories of goods in the Chemical Processing Industry
• Various civilian and military aircraft parts and assemblies, as well as a variety of computer and data processing equipment, all of which are part of the Industrial Manufacturing Industry.

The proposed tariffs are not final. They were published in the Federal Register on June 5. Public hearings will be held in Washington, D.C., on June 22, July 6 and July 7. Public comments will be accepted until July 6. After that, the USTR will finalize the tariff schedule.

Given the broad categories of goods that the USTR proposed to tax, litigation is expected.

In the end, depending on what is excluded from the proposed Section 301 tariffs, and whether they survive legal challenge, it may be that virtually no industry tracked by Industrial Info Resources will be affected.

Overseas Economies Push Back on Report

A variety of foreign trade groups and economies, including Canada, Mexico, China, India, Vietnam, Singapore, Australia and the European Union, pushed back on the USTR report, according to reports in news outlets.

Bernd Lange, chair of the European Parliament's trade committee, wrote in a post on X: "The EU has adopted the world's most stringent rules against products made with forced labor. This looks very much like trying to make the facts fit a legal justification for tariffs that has already been decided."

The Canadian Federation of Agriculture submitted public comments to the USTR that said the group had "serious concern regarding the proposal to impose additional tariffs on imports from Canada and, in particular, the risk that this measure could be expanded through the consultation process to include Canada-U.S.-Mexico-compliant goods." It warned of supply chain disruptions.

A different perspective was raised by the U.S.A. Rice Federation, a trade group representing the rice industry in seven states. In comments submitted to the USTR, that group said it supported the trade agency's findings, endorsed the proposed tariffs, and called for tariffs of 65% or more on imports of rise from some overseas countries to level the competitive playing field.

The USTR issued its Section 301 report June 2, slightly over three months after it began its investigation. Historically, Section 301 investigations take between 12 and 18 months. Roughly 20 pages of the 98-page report are devoted to brief, nearly identical, descriptions of how each given country violated Section 301 of the Trade Act.

Key Takeaways

• To replace tariff revenue generated by the unlawful IEEPA tariffs, the Trump administration has conducted an investigation into the trade practices of 60 economies that account for virtually all goods imported by the U.S.
• The USTR has proposed those economies pay import tariffs ranging from 10% to 12.5%. Numerous classes of goods are excepted.
• Public hearing will be held in late June and early July to gather public feedback on the proposed tariffs, with finalization expected later this year.
• Litigation is expected.
• More Section 301 tariffs are expected to be announced by the Trump administration.

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