The news moves fast these days. You’d be forgiven if you forgot about the tariff debacle, which ended in a Supreme Court decision and refunds to importers. However, like an unlucky penny, a horror movie villain, or Emperor Palpatine, somehow tariffs have returned, and this time the administration appears to be using forced labor as a cover. The Office of the United States Trade Representative recently issued a report recommending new duties on goods from 60 named economies. The office cites forced labor violations as the rationale in its press release:
“The U.S. Trade Representative proposes additional duties on all products of the investigated economies, except as provided in Annex A to the Federal Register notice. For economies that impose a forced labor import prohibition, that have committed to impose and enforce such a prohibition through an Agreement on Reciprocal Trade, or economies that have imposed a partial regime with the effect of preventing the importation of certain forced labor goods, the U.S. Trade Representative proposes 10% as the rate of additional duties. For all other economies, the U.S. Trade Representative proposes 12.5% as the rate of additional duty.”
In Learning Resources Inc. v. Trump, the Supreme Court ruled that the International Emergency Economic Powers Act did not grant the executive branch the power to unilaterally impose tariffs. Therefore, the administration is now looking to Section 301 of the Trade Act of 1974 to accomplish similar goals. The legal rationale is that forced labor in supply chains lowers the price of goods. Those goods produced with forced labor then have an unfair advantage in US markets. Therefore, a tariff is required to remove this unfair advantage.
This would be more believable had the government’s report not found that all 60 economies investigated violated forced labor laws, making them eligible for new tariffs. Included in that group of 60 economies are: Australia, Canada, the European Union, Mexico, and the UK, to name a few. These countries include some with well-documented forced labor import prohibitions that are arguably more aggressive than the United States’ own approach.
It’s always frustrating to see an ESG issue used as a political football. Forced labor is a real issue globally, and the seriousness of that issue is diluted when it is wielded as a political weapon.
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