USTR sprints to finalize forced labor tariffs on 60 economies covering 99 percent of US imports, as governments from Ottawa to Phnom Penh rush through new laws in a last-ditch bid for lower rates
WASHINGTON, July 18, 2026. The public record is closed, the hearing transcripts are filed, and the countdown is running. The Office of the United States Trade Representative is now in the final days of the most sweeping Section 301 action ever attempted: proposed tariffs of 10 to 12.5 percent on imports from 60 economies that together supply 99 percent of everything the United States buys from abroad, justified by a single finding repeated sixty times over, that each of those economies has failed to keep goods made with forced labor out of trade.
With the rebuttal comment window shut as of this week and the Section 122 global surcharge expiring on July 24, Trade Representative Jamieson Greer has said publicly that he intends to conclude the investigations before the stopgap lapses. If he does, the United States will have replaced a court-condemned emergency tariff system with a labor-rights-based one in the space of five months, and the world’s exporters will discover whether the frantic legislative activity of the past six weeks, new import-ban laws tabled in Ottawa, emergency regulations gazetted in Phnom Penh, diplomatic notes filed from Tokyo, bought them anything at all.
An investigation built at speed
The forced labor case was born directly from legal defeat. On February 20, the Supreme Court ruled that the International Emergency Economic Powers Act does not authorize presidential tariffs, demolishing the legal basis of the global duties imposed in 2025. Less than three weeks later, on March 12, USTR initiated 60 parallel Section 301 investigations, one for each of 59 countries plus the European Union, into what the agency styled as acts, policies and practices related to the failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor.
The theory is inventive. The United States has banned imports made with forced labor since Section 307 of the Tariff Act of 1930, and Customs and Border Protection enforces that ban through withhold release orders and, since 2022, through the Uyghur Forced Labor Prevention Act. The Section 301 investigations turn that domestic policy outward: countries that do not maintain and enforce an equivalent import prohibition, the argument runs, are engaged in unreasonable practices that burden American commerce, because their markets serve as open channels for tainted goods and their producers gain cost advantages that American firms, barred from such inputs, cannot match.
On June 2, USTR announced its determination: all 60 economies under investigation, including the European Union, Canada, Mexico, Japan and every other major trading partner, either failed to effectively enforce a forced labor import prohibition or failed to impose any such prohibition at all. A Federal Register notice published June 5 laid out the proposed remedy.
From Section 307 to Section 301
The American forced labor import ban that the investigations hold up as the global benchmark has its own long and imperfect history. Section 307 of the Tariff Act of 1930 prohibited imports of goods made with convict, forced or indentured labor, but for more than eight decades the ban was hollowed out by a consumptive demand exception, which allowed tainted goods to enter if domestic production could not meet American demand. Congress closed that loophole only in 2016, through the Trade Facilitation and Trade Enforcement Act, and enforcement began in earnest afterward through Customs and Border Protection’s withhold release orders, which detain shipments suspected of forced labor ties until importers prove otherwise.
The Uyghur Forced Labor Prevention Act went further, creating a rebuttable presumption that goods from China’s Xinjiang region are made with forced labor and barring them unless importers can demonstrate clean supply chains with documentary evidence. Since its enforcement began in 2022, the law has detained billions of dollars in shipments across electronics, apparel, solar and automotive supply chains, and has forced multinationals to build tracing capabilities that did not exist five years ago.
That history matters to the current proceeding in two ways. First, it supplies the standard against which the 60 economies were measured and found wanting; USTR’s report is, in essence, a comparative audit of the world’s import regimes against the post-2016 American model. Second, it exposes the asymmetry critics have seized on: the United States itself operated with a gutted forced labor ban for 86 years, and its own enforcement remains selective. Several governments made versions of this point in their comments, arguing that a standard the United States met only recently is a curious basis for immediate tariff liability among its trading partners.
Two tiers, one textile valve
The proposed action sorts the world into two tariff tiers. A 10 percent additional duty would apply to economies that already impose a forced labor import prohibition, a group USTR identifies as Canada, Ecuador, the European Union, Indonesia, Mexico and Pakistan; to economies that have made forced labor commitments in their Agreements on Reciprocal Trade with Washington, among them Argentina, Bangladesh, Cambodia, El Salvador, Guatemala, Malaysia and Taiwan; and to the United Kingdom, credited with a partial regime that blocks certain forced labor goods. Wire service tallies put the 10 percent tier at 16 economies.
Everyone else, 44 to 46 economies by varying counts, including China, Vietnam, India, Thailand, Japan and South Korea, would pay 12.5 percent. The rates are deliberately calibrated: the same as, or slightly above, the 10 percent Section 122 surcharge they would replace, so that the transition preserves the revenue stream the administration has promised to rebuild after the Supreme Court ruling turned tariff collections negative this spring.
The proposal contains one notable safety valve: a textile mechanism that would allow defined volumes of apparel and textile imports from certain economies to enter at a reduced Section 301 rate, a concession to American retailers and brands whose sourcing is concentrated in precisely the countries assigned the higher tier.
The public response was enormous. By the July 6 deadline, 1,518 written comments had landed on the docket. Hearings ran for three days, July 7 through 9, with governments from Chile to Sri Lanka requesting appearances, and post-hearing rebuttal comments were accepted through mid-July. The administrative record now stretches to thousands of pages, a paper fortress built, trade lawyers note, with one eye on the litigation everyone expects.
Governments plead their case
What distinguishes this docket from any previous Section 301 proceeding is who is doing the pleading. The commenters are not primarily companies but sovereign governments, dozens of them, each attempting to argue, cajole or legislate its way into the lower tier, or out of the action altogether.
Canada’s submission is the most closely watched. Ottawa already sits in the 10 percent tier by virtue of its existing prohibition, but it wants out entirely. On June 12, the Canadian government introduced Bill C-35, An Act Respecting the Prohibition of the Importation of Goods Produced by Forced Labour, standalone legislation designed to strengthen the country’s ability to identify, intercept and prohibit tainted goods at the border. Canada’s comment to USTR leans on that bill, arguing that in light of its existing prohibition, its supply chain transparency measures, its newly introduced legislation and its commitment to cooperation with Washington, there is no basis for any additional Section 301 duties on Canadian goods, and that goods compliant with the United States-Mexico-Canada Agreement should retain their current treatment.
Japan’s submission points to its July 2025 trade agreement with the United States, asserting that Tokyo has been faithfully and swiftly implementing that accord and calling on Washington to duly recognize those efforts and take appropriate actions.
The most striking entry comes from Cambodia. After a consultative meeting with the Section 301 Committee in Washington on May 15, the Cambodian government adopted Interministerial Regulation No. 450, effective July 1, 2026, which flatly prohibits the import, use, circulation or supply of goods linked to forced labor within the kingdom, enforced jointly by three ministries with sanctions including suspension of import-export activities and certificates of origin. A country facing tariff exposure in June wrote itself a forced labor import ban by July, a legislative velocity that trade scholars note is precisely the kind of behavioral change Section 301 is nominally supposed to induce, and also precisely what makes the tariff look less like remediation and more like leverage.
The open question, as trade law commentator Simon Lester observed on the International Economic Law and Policy Blog, is whether any of it matters. The statute’s process for crediting improvements made after a determination is murky. If Canada’s Bill C-35 becomes law and its enforcement regime matches or exceeds the American one, does Ottawa’s rate fall from 10 percent, and could it reach zero? USTR has not said, and its answer, or silence, in the final action will signal whether the tiers are a genuine incentive structure or a fixed revenue schedule wearing an incentive structure’s clothes.
The hearing room
The three days of hearings from July 7 to 9 offered a rare spectacle: dozens of sovereign governments, alongside industry associations, unions and human rights organizations, testifying in a single American administrative proceeding whose outcome will touch nearly every import entry filed in the country. Requests to appear came from governments as varied as Chile, Ecuador, Guatemala, Guyana, Honduras, India, Jordan, Kazakhstan, Malaysia, Mexico, Pakistan, Peru, South Africa, South Korea, Sri Lanka and Vietnam, and written submissions arrived from dozens more, including Australia, Brazil, Colombia, Costa Rica, Indonesia, Morocco, New Zealand, Nigeria, Norway, Singapore, Taiwan, Thailand and Uruguay.
The transcripts, now posted on USTR’s docket, capture the strange doubleness of the proceeding. Governments came prepared to discuss labor law, and many did, cataloguing inspection regimes, ratified conventions and pending legislation. But the subtext in nearly every submission was the tariff, not the labor standard: what rate, on what products, effective when, and what would it take to change the number. Business witnesses pressed for the textile mechanism to be generous and for critical inputs to be excluded. Labor and human rights witnesses pushed in the opposite direction, urging USTR to condition any lower tier on demonstrated enforcement rather than paper prohibitions.
The deadline logic
The reason for the sprint is fiscal and legal at once. The Section 122 surcharge, imposed on February 24 as a 150-day stopgap after the Supreme Court ruling, expires by operation of law at 12:01 a.m. on July 24. Congress will not extend it before the November midterms. If the forced labor duties are not in force by then, the trade-weighted average American tariff drops from roughly 13 percent to an estimated 7.2 percent overnight, and the Treasury, which recorded a 25.6 billion dollar tariff loss in June as refunds outran collections, loses its replacement revenue stream at the moment it needs it most.
Practitioners think the deadline will be met. Nathaniel Halvorson of Baker McKenzie, a former American trade official, told the Associated Press he expects little if any daylight between the expiring surcharge and the new levies, observing that the agency is operating about as fast as legally possible. The procedural boxes, determination, notice, comments, hearing, rebuttals, have all been checked in barely six weeks, a pace without precedent for an action of this scope.
Speed, however, is also the challengers’ best argument. Sarah Bianchi of Evercore ISI, a former deputy trade representative, told the AP that while Section 301 actions have historically been legally durable, no one has ever used the statute to install what amounts to a universal tariff, and she expects court challenges. The Supreme Court struck down the IEEPA tariffs because the executive stretched a statute beyond what Congress wrote. A tariff on 99 percent of imports, justified by sixty simultaneous findings produced in ninety days, invites the same scrutiny of Section 301.
What it means for supply chains
For importers, the practical picture is a near-universal duty increase arriving with days of notice. Companies should assume the 10 and 12.5 percent tiers take effect on or about July 24 and model landed costs accordingly. Because the duties attach by country of origin, the tier assignment of each supplier country becomes a line item: sourcing from Mexico or the European Union at 10 percent versus Vietnam or India at 12.5 percent changes relative economics, modestly but measurably, across millions of tariff lines.
The textile mechanism deserves close reading when the final notice appears. If meaningful volumes of apparel can enter at reduced rates from designated economies, allocation of those volumes, by quota, license or first-come entry, will become a competitive battleground for brands and importers within weeks.
Compliance officers face a second-order effect. A tariff premised on forced labor enforcement failures will almost certainly arrive alongside intensified Customs scrutiny of forced labor in fact: more withhold release orders, more UFLPA detentions, more supply chain tracing demands. Companies that treated forced labor due diligence as a China-specific exercise should expect the aperture to widen to every tier-two country on the list.
Pricing teams should also think about the cumulative picture rather than this action in isolation. The forced labor duty stacks on top of most-favored-nation rates, on top of Section 232 duties where they apply to metals and derivatives, and on top of the new 25 percent Brazil action for goods within its scope. For a product with steel content sourced from a tier-two country, the all-in duty burden as of late July can differ dramatically from what the same supply chain paid in January, and contracts negotiated on January assumptions are already generating disputes over who absorbs the difference. Purchasing agreements signed in the coming months should address tariff allocation explicitly, with defined triggers and sharing formulas, rather than leaving the question to force majeure clauses that were never written for a world where the tariff schedule changes quarterly.
Exporters and their governments, meanwhile, have just been handed a template. Cambodia’s July 1 regulation and Canada’s Bill C-35 show what Washington’s new trade diplomacy looks like in practice: pass an import ban, enforce it visibly, document it in a USTR docket, and argue for a better tier. Whether USTR rewards the effort in its final action will determine if this becomes a genuine race to raise global labor standards, as supporters hope, or simply a new tollbooth on the old highway, as critics charge.
After the signature
Finalization will not end the story; it will start several new ones. Section 301 actions run for four years and terminate automatically unless a beneficiary of the action requests continuation, with the statute contemplating periodic review of whether the underlying practices persist. That review cycle gives every affected government a standing incentive to keep legislating and enforcing, and gives USTR recurring opportunities to move countries between tiers, a dynamic that could turn the tariff schedule into a rolling scorecard of global forced labor policy.
Modification is possible sooner than that. The statute allows the trade representative to adjust actions when the practices at issue change, and the final notice is expected to say something about how, and whether, post-determination reforms like Canada’s Bill C-35 or Cambodia’s July regulation will be credited. An exclusion process is another open question. In the China Section 301 action of the first Trump term, USTR eventually granted thousands of product-specific exclusions under congressional and industry pressure. Whether a parallel process opens here will matter enormously to importers of goods with no plausible forced labor nexus who nonetheless face the across-the-board duty.
And then there is the economics. A 10 to 12.5 percent duty on virtually all imports operates, in incidence terms, much like the surcharge it replaces: studies of the 2018 to 2019 tariff rounds consistently found that American importers and consumers bore the overwhelming share of the burden through higher prices rather than foreign exporters through lower ones. The administration argues the revenue, projected in the hundreds of billions of dollars over time, and the leverage justify the cost. Retailers answer that the tariff arrives on top of Section 232 metal duties, the new Brazil action and pharmaceutical tariffs taking effect July 31, a cumulative burden that will be visible in consumer prices into 2027. Both things can be true, and in the year before an election, both will be argued loudly.
A precedent either way
However the final notice reads, the forced labor case has already changed the boundaries of American trade law. It establishes that a labor rights rationale can carry near-universal tariffs; that Section 301 findings can be produced against sixty economies at once; and that the comment-and-hearing process can compress into weeks when revenue demands it. Human rights advocates find themselves in the uncomfortable position of applauding the attention to forced labor while doubting the sincerity of a remedy measured in percentage points of duty rather than in goods actually blocked at the border.
The tariffs will be finalized, in all likelihood, within days. The lawsuits will follow within months. And the sixty governments now waiting on Ambassador Greer’s signature will learn whether the frantic diplomacy of June and July moved their number, or whether the number was never really the point.