US Crackdown: Starting Friday, the Trump administration is set to impose new tariffs of 10% and 12.5% on 60 trading partners, including India and the European Union (EU). This move targets countries accused of failing to take adequate action or implement effective laws to curb forced labor. The decision comes as a temporary 10% global tariff previously imposed by the US is set to expire.
Under the new system, a 10% tariff will apply to products from countries that have adopted robust laws and effective enforcement mechanisms to combat forced labor. Conversely, imports from countries where regulations or their implementation fall short of US standards will be subject to a 12.5% tariff. India has taken several legislative and policy measures in this regard in recent years, resulting in its placement in the 10% tariff category. The 60 economies covered by the US forced labor tariff include Algeria, Angola, Argentina, Australia, the Bahamas, Bahrain, Bangladesh, Brazil, Cambodia, Canada, Chile, China, Colombia, Costa Rica, the Dominican Republic, Ecuador, Egypt, El Salvador, the European Union (EU), Guatemala, Guyana, Honduras, Hong Kong (China), India, Indonesia, Iraq, Israel, Japan, Jordan, Kazakhstan, Kuwait, Libya, Malaysia, Mexico, Morocco, New Zealand, Nicaragua, Nigeria, Norway, Oman, Pakistan, Peru, the Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Sri Lanka, Switzerland, Taiwan, Thailand, Trinidad and Tobago, Türkiye, the United Arab Emirates (UAE), the United Kingdom (UK), Uruguay, Venezuela, and Vietnam.
According to a White House press release, the Trade Representative has proposed a 10% ad valorem tariff on goods from economies that:
- Prohibit the import of goods made with forced labor but have not yet effectively enforced this ban. These are:
Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan.
- Have made commitments regarding the prohibition of forced labor imports in their respective reciprocal trade agreements:
Countries subject to the 10% tariff include Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, Guatemala, Indonesia, Malaysia, and Taiwan. 3. A partial system has been implemented regarding the restriction of imports associated with forced labor:
United Kingdom
The White House identified other economies that have:
- Either banned imports linked to forced labor:
Cambodia, Guatemala, Honduras, India, Sri Lanka, Trinidad and Tobago
- Or pledged—under a mutual trade agreement—to ban imports linked to forced labor
Jordan
The White House states, “As a result of these measures, the Trade Representative has advised me that a 10 percent tariff should be imposed on goods from these countries to further encourage them to effectively implement such bans, and—in the case of Jordan—to effectively enact legislation fulfilling their pledges to ban imports linked to forced labor.”
Most trading partners will face a 12.5% tariff, but a lower rate of 10% will apply to 17 countries that have implemented some restrictions on forced labor. Five other trading partners—including the European Union—will face additional levies to bring their total ‘Most-Favored-Nation’ tariff rate to either 10% or 12.5%.
Therefore, the 10 percent tariff rate will apply to 17 countries:
Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, the United Kingdom, and Trinidad and Tobago. A 12.5 percent tariff rate will apply to the remaining countries.
The White House stated, “For all other countries—where the Trade Representative has found that failure to curb imports linked to forced labor warrants action under Section 301—the Trade Representative has proposed a 12.5 percent ad valorem (value-based) Section 301 tariff.”
These include China, Japan, South Korea, Brazil, Switzerland, and Vietnam.
(With agency inputs)