The Donald Trump administration on the 23rd (local time) imposed tariffs of 10% to 12.5% on 60 economies worldwide, saying they failed to properly block the inflow of goods made with forced labor. Major foreign media, including the Financial Times (FT) and AP, said the United States rebuilt global tariff walls by merely changing the legal basis to coincide with the expiration of the existing universal tariff.
The Office of the United States Trade Representative (USTR) said it would apply new tariffs based on Section 301 of the Trade Act to imports coming from the targeted economies starting at 12:01 a.m. on the 24th Eastern time (1:01 p.m. on the 24th Korea time). The start time of the new tariffs exactly matched the time when the existing universal tariff based on Section 122 of the Trade Act ended. The Section 301 tariffs will apply for a basic four years from that date and can be extended later at the discretion of the U.S. administration.
The scope this time included not only China and developing countries but also most of the United States' major trading partners, such as the European Union (EU), the United Kingdom, Canada, Japan and Korea. Combined, the 60 economies account for 99.4% of all U.S. imports by country of origin. While past Section 301 investigations mainly targeted specific countries or industries such as China, major outlets said this measure effectively aimed at all imports entering the United States.
The United States put forward "forced labor" as the rationale for imposing tariffs this time. It did not only take issue with countries that directly used forced labor. It judged that countries that failed to prevent goods and raw materials produced with forced labor in other countries from entering their own markets also participated in unfair trade. The logic is that when cheaply made raw materials and parts from forced labor are processed in several countries before entering the United States, U.S. corporations and workers, who bear normal wages and production costs, suffer harm. According to the International Labour Organization (ILO), as of 2021 the global population in forced labor is estimated at about 27.6 million. Jamieson Greer, the USTR representative, said, "The United States has had a system banning imports of forced-labor products for nearly 100 years and has enforced it strictly," and added, "It is long past time for our trading partners to do the same."
Rather than scrutinizing each country's forced-labor situation with specific figures and evidence, the United States imposed differentiated tariffs based on whether countries had adopted the systems Washington demanded. Countries that introduced laws banning imports of forced-labor goods, as urged by the United States, were set at 10%, and those that did not were set at 12.5%. India was initially in the 12.5% group but passed related legislation during the review period and came down to 10%. Cambodia and Guatemala also received 10% on the condition of legislation or a pledge to introduce it. By contrast, 38 economies including China, Brazil, Australia and Vietnam that did not introduce such laws had 12.5% added on top of existing tariffs.
The EU and Taiwan were set at 10% including existing tariffs, and Korea, Japan and Switzerland were set at 12.5% including existing tariffs. Some items such as oil, gas and fertilizers, and products traded duty-free under the United States-Mexico-Canada Agreement (USMCA), were excluded from these tariffs.
President Trump last April imposed double-digit tariffs on nearly all countries under the International Emergency Economic Powers Act (IEEPA). But the U.S. Supreme Court ruled in February that the law does not grant tariff authority. Afterward, the U.S. administration had to refund the tariffs already collected to importers after protracted litigation. As a core economic policy wobbled, Trump moved immediately after the ruling to reimpose a uniform 10% tariff worldwide under Section 122 of the Trade Act. However, tariffs under this provision can be maintained for only up to 150 days, so they expired at 12 a.m. on the 24th.
The Wall Street Journal (WSJ) said Section 301 of the Trade Act, which the Trump administration invoked this time, is considered legally more durable than the basis for the previous tariffs invalidated by the Supreme Court. Section 301 of the Trade Act specifies that, after investigating unfair trade practices by foreign countries, the United States may impose tariffs and import restrictions. Allowing forced labor is one of the unreasonable practices defined by law. During his first term, Trump imposed tariffs on China under this provision. Even then, those tariffs survived court scrutiny. AP said the USTR is separately investigating overproduction in manufacturing in 16 economies that account for 70% of U.S. imports, making it likely that the scope of Section 301 tariffs will expand further.
Major trading partners signaled legal battles immediately after the announcement, arguing that splitting 60 economies with disparate forced-labor conditions into only two tiers of 10% and 12.5% repeats earlier flaws. The Brazilian government, which was hit with the 12.5% tariff, issued a statement calling the move "arbitrary and unfair." It said, "The United States has chosen to manipulate a grave issue of human rights and the struggle of workers worldwide to brand 59 countries and the EU as unfair-practice states," and announced it would trigger domestic legal steps that could lead to retaliatory tariffs and file a complaint with the World Trade Organization (WTO).
Legal fights were also signaled inside the United States. Tariffs are paid not by foreign governments but by U.S. importers, which generally pass the expense on to consumer prices. AP noted that pushing ahead with new tariffs ahead of the Nov. 3 midterm elections amid Americans' frustration with inflation could heighten political risk. U.S. importers and trade groups are also considering, as before, filing suits with the Court of International Trade.
Richard Neal, the Democratic ranking member of the House Ways and Means Committee, said, "Today's forced-labor rationale is so convenient that it is hard to take seriously," adding, "Forced labor is a real problem across supply chains that requires serious enforcement, not a pretext to prop up a tariff policy built on dubious legal theories and personal grievances." The Congressional Research Service (CRS) noted that a key issue in litigation could be whether Congress delegated to the administration the authority to sanction most major U.S. trading partners all at once.
Starting on the 24th, Korea, along with Japan and Switzerland, will face a combined 12.5% when existing tariffs and the new tariffs are added together. Under the Korea-U.S. Free Trade Agreement (FTA), general products that previously had no tariffs will see a straight 12.5% applied. For products that already had tariffs, only the difference will be added to bring the total to 12.5%. Items like automobiles, steel, aluminum and some semiconductors that already face separate national security tariffs are excluded this time. The Korean government explained its domestic systems and enforcement structure to block the inflow of forced-labor goods and asked for a withdrawal, but it did not get removed from the final list.
☞Section 301 of the Trade Act
A provision of the U.S. Trade Act enacted in 1974 that allows retaliatory measures such as tariffs or import restrictions after investigating unfair trade practices by foreign countries. It is not an emergency presidential power but is grounded in prescribed trade procedures such as investigations and public hearings.