Trump proposes 10% tariff to Canada, Mexico, EU over forced labor

The Trump administration wants to reimpose a 10 percent tariff on top trading partners including the European Union and Canada, while hitting others with a higher rate, citing concerns about forced labor.

The U.S. Trade Representative’s Office made those proposals as part of a report it released late Tuesday with the results of its investigation into 60 trading partners over their failure to impose and enforce laws to prohibit goods made with forced labor. It’s one of two sprawling trade investigations the administration launched earlier this spring in an effort to restore President Donald Trump’s global tariffs that were struck down by the Supreme Court in February.

“The failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable,” said U.S. Trade Representative Jamieson Greer in a written statement. “This creates a dynamic where American workers are forced to compete globally on an unlevel playing field. We will no longer tolerate this disparity.”

The USTR probe, conducted under Section 301 of the Trade Act of 1974, found that six countries have failed to effectively enforce existing laws prohibiting goods made with forced labor: Canada, Ecuador, the European Union, Indonesia, Mexico and Pakistan. The report recommended a 10 percent duty.

It recommended the same duty for another nine countries that have made commitments to address forced labor through signed trade agreements with the U.S.; and the United Kingdom, which has “imposed a partial regime” to prevent forced labor in its supply chains.

The findings come at a critical time for the trade relationship with the EU, which is holding a vote later this month to lower tariffs on U.S. goods as part of an agreement struck last July. It’s also something of a reprieve for Canada and Mexico amid ongoing negotiations over the U.S.-Mexico-Canada Agreement, the North American trade pact that faces a mandatory review this year. Both Canada and Mexico had to adopt provisions aimed at eliminating forced labor under the initial USMCA agreement Trump inked in his first term.

The other 44 countries investigated in the USTR probe are set to face a 12.5 percent tariff rate, including major trading partners like Japan and South Korea. The result will be a tariff level slightly lower than what Trump imposed last year under the International Emergency Economic Powers Act. But it marks an increase from the temporary 10 percent global tariff the U.S. currently has in place, which Trump imposed after the Supreme Court struck down his other duties.

The administration has been clear that the 10 percent rate, which expires in late July, was intended to be a bridge until USTR could complete its Section 301 investigations.

In addition to the forced labor probe, USTR is also investigating 15 countries over excess manufacturing capacity, including Bangladesh, Cambodia, China, the European Union, Indonesia, Japan, Malaysia, Mexico, Norway, Singapore, South Korea, Switzerland, Taiwan, Thailand and Vietnam.

USTR has requested written comments by July 6, and will hold public hearings on July 7.


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