US proposes new tariffs to 60 countries over forced labor trade practices

The Office of the U.S. Trade Representative has proposed imposing additional tariffs of up to 12.5% ​​on imports from 60 countries for failing to ban products made with forced labor, a drastic measure that would hurt most trading partners, including China, the European Union and Japan.

The decision, made under Section 301 of the Trade Act of 1974, found that all 60 countries have failed to impose or effectively enforce forced labor-related import bans, creating what it called an “unequal playing field” for U.S. workers.

USTR is proposing a 10% tariff for economies that have adopted a full or partial ban on forced labor trade, and a 12.5% ​​tariff for all other economies.

Trade officials also proposed a separate textile mechanism that would allow certain imports of clothing and textile products from some countries to enter the United States at discounted rates. Written comments on the proposal are due by July 6, and a public hearing is scheduled for July 7, according to the notice.

“It is unacceptable that our most important trading partners will not address imports of products made with forced labor, creating a dynamic that forces American workers to compete globally on an unequal playing field,” said U.S. Trade Representative Jamieson Greer. “We will no longer tolerate this disparity.”

The proposal comes after the U.S. Supreme Court earlier this year struck down most of President Donald Trump’s “Emancipation Day” tariffs and urged the president to impose a 10% basic tariff worldwide under Section 122, which also expires in July.

Section 301 authorizes the President to impose taxes to combat unfair foreign trade practices that harm U.S. commerce.

An EU spokesperson said the reasons behind the US’s recent tariffs were “unjustified”.

“On the EU side, we are on track to ensure that the tariff commitments in the Joint Statement are fulfilled by the end of June,” he added in comments reported by Reuters.

Nick Marro, head of the Economist Intelligence Unit, said the Supreme Court setback helped delay the tariff timeline but did not “bar the teeth” of the president’s policies, and predicted the Trump administration would begin announcing more studies and tariffs in preparation for restarting trade talks.

However, the impact of the proposed tariffs would likely be mitigated by significant exemptions for products, including electronics and artificial intelligence-related products, Malo added.

Deborah Elms, director of trade policy at the Hinrich Foundation, said tariff rates under Section 301 could be further adjusted, but meaningful changes would create different economic incentives for companies and reshape global supply chains.

Separately, the U.S. government on Wednesday began soliciting public comments on the scope of a new U.S.-China trade commission agreed to by both sides at last month’s bilateral summit that would lead to lower tariffs on each other’s products. The government also solicited public opinion on non-sensitive sectors that could benefit from both tariff changes.

Mallo said China may refrain from retaliating in the short term, at least when it comes to explicit trade restrictions, but there are limits to China’s restraint, especially if additional import tariffs from the United States are imposed.

—CNBC’s Evelyn Cheng contributed to this report.