Allies from Tokyo to Canberra are protesting Washington’s new forced labor tariffs on 60 economies, calling the human rights rationale a pretext for rebuilding the duties American courts struck down, as the first full week under the new regime begins.
WASHINGTON, July 28, 2026
The United States began its first full business week under a new global tariff regime Monday amid a widening chorus of protest from some of its closest allies, who say the forced labor rationale behind the new Section 301 duties is a legal fig leaf stretched over a familiar objective: keeping tariff revenue flowing after the Supreme Court dismantled the administration’s previous program.
The new duties, announced by the Office of the United States Trade Representative on July 23 and effective at 12:01 a.m. Eastern time on July 24, impose additional tariffs of 10 to 12.5 percent on goods from 60 economies that together supply about 99.4 percent of American imports, according to a USTR fact sheet. The action followed Section 301 investigations, opened in March at President Trump’s direction, into whether those economies had failed to impose and effectively enforce prohibitions on the importation of goods produced with forced labor.
By the weekend, the diplomatic reaction had hardened. Japan lodged a formal protest. South Korea called the duties unwarranted. Australia demanded their removal. Brazil threatened countermeasures under its reciprocity law and said it would take the dispute to the World Trade Organization. New Zealand’s trade minister flatly rejected the premise. Even partners that received the lower 10 percent rate registered their objections, in tones ranging from resignation to fury.
The breadth of the backlash reflects the breadth of the action. In a single stroke, the United States has applied new duties to nearly every trading partner it has, on a legal theory never before used at this scale, days after the last remnants of its previous tariff regime expired by operation of law.
How the new regime works
The architecture of the July 24 action is tiered. Seventeen economies that have adopted forced labor import prohibitions, committed to adopt them through reciprocal trade agreements, or imposed partial regimes received the lower 10 percent rate. That group includes Canada, Mexico, India, the United Kingdom, Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, Guatemala, Honduras, Indonesia, Jordan, Malaysia, Pakistan, Sri Lanka, and Trinidad and Tobago.
For certain non-exempt products of the European Union, Japan, South Korea, Switzerland, and Taiwan, the new duties apply net of existing most favored nation rates, so that total tariffs reach 10 percent for EU and Taiwanese goods and 12.5 percent for Japanese, Korean, and Swiss goods. Products already carrying MFN rates at or above those levels face no new duty. All other investigated economies, a list that includes China, Vietnam, Thailand, Brazil, and most of the remaining top American suppliers, drew a flat 12.5 percent.
The action also carves out significant exemptions: raw materials whose taxation could choke off domestic supply, products whose disruption would ripple across the economy, goods that cannot be produced domestically in sufficient quantity or at reasonable prices, and specified products from economies that have made commitments on forced labor enforcement. Informational materials, donations, and accompanied baggage are excluded as well.
Ambassador Jamieson Greer, the US Trade Representative, cast the measure as the overdue enforcement of a moral standard the United States has long applied to itself. “The United States has had a forced labor import ban for nearly a century, and rigorously enforces it; it’s well past time for our trading partners to do the same,” Greer said in the announcement. “Today’s action will begin to correct what is both a human rights abuse and distortive trade practice to improve the welfare of workers everywhere.”
A senior administration official went further, describing the measure to reporters as the most sweeping international labor rights action the United States, or any country, has ever taken. The official argued that countries without enforced bans on forced labor goods enjoy an unfair advantage over the United States, which has prohibited such imports under Section 307 of the Tariff Act of 1930 since before the Second World War. The International Labour Organization estimates that about 28 million people worldwide were in forced labor as of its most recent global count.
Allies cry foul
The governments on the receiving end see the human rights framing differently. Japan, assigned a 12.5 percent total rate, reacted with unusual bluntness for a government that has spent two years cultivating trade peace with Washington. Tokyo’s chief cabinet secretary called it “regrettable that the measure imposes tariffs on the grounds of non-existence of measures banning imports of goods made by forced labor, even though Japan’s industry and trade are in line with international rules.” Japanese officials noted that they had understood earlier bilateral arrangements to foreclose precisely this kind of additional duty.
South Korea, which faces the same 12.5 percent ceiling, had urged reconsideration in formal comments to USTR, calling the proposal “unwarranted” and “disproportionate” given the circumstances of Asia’s fourth largest economy, according to Yonhap. Seoul’s trade ministry offered the faint consolation that the final decision at least eased uncertainty about where American tariffs would land.
Australia’s trade minister, Don Farrell, was less diplomatic. The tariffs are “unjustified” and “should be removed,” he said in a statement, arguing that Australia’s laws against forced labor and modern slavery “are among the strongest in the world.” New Zealand’s trade and investment minister, Todd McClay, told Radio New Zealand that forced labor “doesn’t happen through our trade. It doesn’t exist in New Zealand. But they are looking for any way to put a tariff rate back on.”
Brazil, already carrying a separate 25 percent Section 301 tariff imposed earlier this month over what USTR called unreasonable acts, policies, and practices, accused Washington of manipulating “an issue dear to human rights and the global struggle of workers.” The government said the new duties could trigger its reciprocity law, which authorizes countermeasures, and confirmed it would challenge the action at the World Trade Organization.
China’s Commerce Ministry denounced the tariffs as “typical protectionism” and called for their cancellation, while separately disclosing on Monday that Washington had, in Beijing’s account, privately pledged to cap replacement tariffs on Chinese goods at 20 percent. The European Union called the reasoning behind the tariffs unjustified even as it noted the action was consistent with the ceilings in the EU-US trade agreement that took effect July 1. And Ambassador Greer, for his part, issued a pointed statement accusing the EU of creating uncertainty in the transatlantic trade relationship.
Not every reaction was hostile. Canada, which received the 10 percent rate, called the action “not unexpected.” Dominic LeBlanc, the minister for Canada-US trade, said Ottawa “shares the United States’ objective of ensuring goods produced with forced labour do not enter our supply chains” and would continue engaging constructively, a notably measured response from a government simultaneously facing separate 50 percent Section 338 tariffs on a range of Canadian goods taking effect August 19.
The legal shadow
Behind the diplomatic argument lies a legal one, and it is the same argument that felled the administration’s tariffs once already. In February, the Supreme Court ruled 6 to 3 in V.O.S. Selections Inc. v. United States that the International Emergency Economic Powers Act does not authorize the president to impose tariffs, invalidating the reciprocal tariff program at the center of the administration’s trade policy. The president responded within hours by invoking Section 122 of the Trade Act of 1974, which permits a temporary import surcharge of up to 15 percent for 150 days to address balance of payments problems. That 10 percent global surcharge took effect February 24 and expired, as the statute required, on July 24.
The forced labor tariffs switched on at the very moment Section 122 switched off, a synchronization that critics say reveals their true function. Alan Wolff, a senior fellow at the Peterson Institute for International Economics and a former deputy director general of the World Trade Organization, wrote that the new tariffs “would represent another case of presidential overreach” and predicted that the Supreme Court would likely overturn them if challenged. Wolff argued that the Constitution vests tariff authority in Congress and that duties this broad, imposed on this rationale, are unlikely to survive judicial scrutiny. He also questioned whether tariffs are an effective instrument against forced labor at all, since they tax entire economies rather than the specific goods and facilities where abuses occur.
The administration counters that Section 301 is a fundamentally different instrument from IEEPA. The statute explicitly authorizes the trade representative to impose duties in response to unreasonable or discriminatory foreign practices that burden American commerce, and the forced labor investigations followed the full procedural sequence the law prescribes: initiation on March 12, public hearings in late April, consultations with more than 45 governments, a formal determination on June 2, more than 1,600 written comments on the proposed action, and three days of hearings in early July at which more than 100 witnesses testified. In total, USTR says it reviewed over 2,100 public comments across the investigations.
Congress is stirring as well. Senator Ron Wyden of Oregon introduced legislation on July 22, the Congressional Trade Powers Reform Act, that would repeal Section 122 and Section 338 outright and require congressional approval before a president could impose duties under Sections 301, 201, or 232. The bill faces long odds in the current Congress, but it signals that the legislative branch’s patience with executive tariff improvisation is wearing thin in both parties.
The economics of a near-universal tariff
For the American economy, the practical question is what a 10 to 12.5 percent duty on virtually all imports does that the previous 10 percent surcharge did not. The answer, economists say, is: slightly more of the same. The new regime raises the average rate modestly, shifts the distribution among trading partners, and adds a layer of complexity that did not exist under the flat Section 122 surcharge.
The revenue stakes are considerable. Tariff collections ran at 29.4 billion dollars in the first quarter of 2026, an annualized pace above 100 billion dollars, even as Customs and Border Protection was simultaneously paying out refunds of the invalidated IEEPA duties, which have now surpassed 86 billion dollars according to the agency’s court filings. The forced labor tariffs are designed to keep that revenue engine running under a statute the courts have historically treated with more deference.
For importers, the transition brings immediate compliance work. Goods that were on the water before July 24 qualified for an in-transit exception covering entries through July 28, meaning Tuesday is the first day the new duties bite without exception. The postal duty threshold also changed on July 24, rising to 2,500 dollars, altering the calculus for low-value ecommerce shipments. Brokers have spent the week reclassifying entries, mapping the exemption annexes, and untangling how the new duties stack with existing Section 232 tariffs on steel, aluminum, copper, autos, semiconductors, and lumber, and with the first-term Section 301 duties on China, all of which remain in force and can apply on top of the new rates.
Retailers and manufacturers face familiar arithmetic. Studies of the earlier tariff rounds consistently found that American importers and consumers, not foreign exporters, bore the bulk of the cost. A 12.5 percent duty on a broad import base arrives as businesses are placing orders for the holiday season, and the timing leaves little room to reroute supply chains, particularly when nearly every alternative sourcing country is covered by the same action.
There is, however, a built-in incentive structure that distinguishes this action from its predecessors. Because the tariff tiers are tied to forced labor enforcement, a country can, in principle, earn its way to the lower rate, or out of the tariffs on specific products, by adopting and enforcing an import ban. Politico reported that several countries did exactly that between the June proposal and the July final action, lowering their rates by moving on forced labor legislation. The European Union’s own ban on products made with forced labor takes effect in December 2027, and USTR has signaled that exemptions for certain economies are designed to encourage them to follow through on commitments.
What comes next
The next moves belong to the trading partners and the courts. Brazil’s WTO challenge will test a dispute settlement system that has struggled for relevance. Japan and South Korea must decide whether to negotiate, retaliate, or wait for American litigation to do the work for them. Legal challenges from importers appear inevitable, and the Court of International Trade, which handled the IEEPA cases, is the likely venue.
USTR, meanwhile, shows no sign of slowing down. The separate Section 301 investigation into structural excess capacity and production, covering 16 trading partners including China, the EU, and Mexico, remains open and could produce another round of duties. Ambassador Greer has said the administration’s Section 301 program would eventually address about 99 percent of American trade. A week into the new regime, with allies protesting, refunds still flowing from the last regime, and new investigations pending, the only safe prediction about American tariff policy is that its current form is not its final one.
The WTO dimension
Brazil’s promised challenge at the World Trade Organization will land in a dispute settlement system that has been partially paralyzed since 2019, when the United States began blocking appointments to the Appellate Body. A panel could still hear the case and issue findings, but any adverse ruling could be appealed into the void, a maneuver trade lawyers call appealing into the abyss, leaving the dispute legally unresolved indefinitely.
Even so, the symbolic stakes are high. The forced labor tariffs invoke a values-based rationale of the kind the WTO’s general exceptions were arguably designed to accommodate; Article XX of the General Agreement on Tariffs and Trade permits measures relating to the products of prison labor and measures necessary to protect public morals. Whether duties applied to entire economies, calibrated by tiers, and synchronized to the expiry of an unrelated tariff authority can shelter under those exceptions is a question the system has never confronted at this scale. A proceeding, even an incomplete one, would force the first formal multilateral examination of the new American tariff architecture.
Geneva’s relevance may ultimately be less important than the bilateral channels. The pattern of the past month suggests the administration prefers direct dealmaking: the EU secured a 15 percent all-inclusive ceiling through its trade agreement, Jordan signed a reciprocal trade agreement in July, and Politico reported that several economies bargained their way to lower forced labor rates by enacting import bans between the June proposal and the July final action. The lesson trading partners are drawing is that relief runs through Washington, not through Geneva.
Sector winners and losers
Within the United States, the new tariffs redraw competitive lines industry by industry. Domestic steel, aluminum, and other import-competing manufacturers welcomed the action; USTR circulated a release the same week collecting praise from steelworkers, manufacturers, and farm groups. Producers who compete with imports from the 12.5 percent tier gain the most protection, particularly where their foreign rivals previously paid only MFN rates.
Importers and retailers absorb the mirror image. Import-dependent trade groups spent the spring warning that a near-universal duty arriving weeks before holiday order deadlines would feed directly into consumer prices. Low-margin categories such as apparel, footwear, toys, and consumer electronics have the least capacity to absorb a 12.5 percent cost increase, and the breadth of the action leaves few duty-free origins to shift toward.
American manufacturers who rely on imported inputs occupy the uncomfortable middle. A machine shop importing components from Taiwan, a food processor buying ingredients from Southeast Asia, or an automaker sourcing parts across multiple covered economies now faces higher input costs that its foreign competitors, selling finished goods into third markets, do not bear. The exemption annexes for raw materials and economy-critical products blunt some of this, but coverage is uneven, and an exclusion request process of the kind that characterized earlier Section 301 rounds has not yet been announced for this action.
Agriculture watches nervously in both directions. Farm groups praised the tariffs’ labor rights framing, but American agricultural exporters are historically the first target of foreign retaliation, and Brazil’s reciprocity law, China’s reserved countermeasures, and the EU’s suspended rebalancing lists all point in the same direction if the dispute escalates.
What importers should do now
Trade counsel and customs brokers have converged on a short list of immediate priorities. The first is classification work: determining, product by product, whether goods fall within the exemption annexes, which cover raw materials, economy-critical products, and specified goods from economies with forced labor commitments. The annexes are keyed to tariff subheadings, and small classification differences now carry a 10 to 12.5 percent consequence.
The second is documentation of origin and transit. The in-transit exception for goods loaded before July 24 expires with entries filed today, and CBP can be expected to scrutinize entry dates aggressively. Importers should also revisit first sale valuation, tariff engineering, and foreign trade zone strategies that gained currency during earlier rounds, since every legitimate technique for reducing dutiable value now yields larger savings.
The third is preserving rights in the event the courts intervene. The IEEPA experience is instructive: importers who kept clean records and filed timely protests are now recovering refunds from a repayment program that has already returned more than 86 billion dollars, while those who slept on deadlines are litigating their way into the remedy. If the forced labor tariffs meet the same fate, the paperwork importers file this summer will determine who gets paid.
The final priority is scenario planning rather than rate memorization. The excess capacity investigation is pending, the pharmaceutical onshoring deadline arrives Friday, Canada’s Section 338 tariffs take effect August 19, and the China truce expires in November. Each of those events can reshape landed costs on short notice. A week into the new regime, the companies best positioned are not those that predicted the current rates, but those that built the flexibility to survive being wrong.