Tariffs against slavery: who benefits?

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The Trump administration has proposed introducing additional import tariffs on 60 countries, citing insufficient efforts to combat the use of forced labor in global supply chains. The new measures could affect the United States’ largest trading partners, from European Union countries to India.

Washington’s key legal argument is not that each of the listed countries systematically uses forced labor across all export industries. The claims concern the fact that existing mechanisms for monitoring, regulation, and enforcement of bans on the import of such goods are considered by the United States to be insufficient or ineffective.

U.S. authorities argue that this situation creates unequal competitive conditions for American workers and manufacturers. The initiative comes at a time when the S&P 500 index has reached new all-time highs, adding a new source of trade-related risk to the markets.

Reminder

The legal basis for the initiative is investigations conducted under Section 301 of the Trade Act of 1974 — one of the most powerful instruments of U.S. trade policy.

The Office of the United States Trade Representative has proposed additional duties of 10% and 12.5%.

Previously, the Trump administration had already used a temporary global tariff of 10% under Section 122. That measure expires in July, and the new “labor-related” tariffs could take effect simultaneously with the expiration of the temporary regime.

For the United States, this initiative has moral, political, and geoeconomic dimensions at the same time.

According to the proposal:

• Canada, Mexico, Taiwan, and the United Kingdom could face an additional tariff of 10%;
• China, Japan, India, South Korea, Brazil, and Switzerland could face a tariff of 12.5%.

Why does this matter?

From an economic perspective, the initiative appears to be an attempt to transform the existing system for combating goods produced using forced labor from a mechanism targeting specific products into a universal tariff instrument for influencing trading partners.

The proposal is part of a broader Trump administration strategy to restore tariff policy following a U.S. Supreme Court ruling in February, which concluded that the president had exceeded his authority by using emergency powers to impose large-scale tariffs.

At the same time, Washington is conducting public consultations on the creation of a new U.S.–China Trade Council, an agreement that was reached following a meeting between Trump and Xi Jinping. The new body is expected to identify categories of goods that are not sensitive to tariff regulation and could therefore qualify for preferential treatment even if broader restrictions remain in place.

From a political perspective, the initiative appears particularly advantageous for Trump. It is one of the few cases in which tariff policy can simultaneously be presented as protection of American jobs, a tool of pressure on China, a fight against forced labor, and an effort to restore order in foreign trade. Such rhetoric traditionally finds support among voters in industrial states.

The proposal contains several important exemptions:

• import quotas on clothing and textiles from certain countries will be linked to the volume of purchases of American textile products by those countries;
• beef, tomatoes, bananas, coffee, orange juice, and several other food products are completely exempt from the new tariffs;
• metals already subject to separate tariffs, as well as certain types of fuel and chemical products, are not covered by the initiative.

What does this mean for the market?

For companies with international manufacturing and logistics chains, the consequences could be substantial. The issue is not only the potential increase in tariff expenses but also stricter requirements for disclosure, proof of product origin, and verification that forced labor is absent at all stages of the supply chain.

For the United States’ largest trading partners, the initiative will become a serious test of the resilience of existing trade relations.

In addition, the new proposal could complicate the prospects for a trade truce between Washington and Beijing that was achieved following the May summit between Trump and Xi Jinping.

It is important to keep in mind that this is still only a proposal. The new tariffs will not take effect automatically.

The document is currently undergoing a public consultation process. Written comments are being accepted until July 6, while public hearings under Section 301 will begin on July 7. Significant changes may still be made to the proposal before the consultation process is completed.

So we act wisely and avoid unnecessary risks.

Profits to y’all!