THE United States yesterday imposed new tariffs of 10 per cent and 12.5pc on goods from 60 trading partners, including the EU and China, alleging those countries failed to curb imports made by forced labour, just as a temporary 10pc global tariff expired.
The move is the White House’s first step in efforts to rebuild President Donald Trump’s near-global tariff wall after the US Supreme Court in February struck down his ‘reciprocal’ duties of 10pc to 50pc imposed last year under a national emergencies law to try to shrink the US trade deficit.
New tariffs had been expected, but trade partners around the world joined in strongly disputing the justification for them. Some, however, noted they would make no difference to current levies or even marked a slight improvement.
Bond yields edged higher as the tariffs added to inflation risk, but reaction was generally limited in financial markets more focused on the Middle East conflict.
The new tariffs, announced in a Federal Register notice, cover 99.4pc of US imports, but include numerous product exemptions, such as oil and gas, fertiliser and certain food items. The US claims that trading partners had failed to clamp down on trade in goods made with forced labour passing through their supply chains, an accusation those countries deny.
“The United States has had a forced labour import ban for nearly a century, and rigorously enforces it. It’s well past time for our trading partners to do the same,” US Trade Representative Jamieson Greer said.
“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.”
Imposed under Section 301 of the Trade Act of 1974, the new duties allow the administration to maintain a tariff floor on virtually all US imports despite the Supreme Court setback. The tariffs are also likely to face less legal risk as Section 301 has survived prior court challenges.
The US imposed a 10pc duty on goods of Argentina, Bangladesh, Britain, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago saying they had bans or plans to ban forced labour imports but were not effectively enforcing such prohibitions.
The European Union, Taiwan, Japan, South Korea and Switzerland were assigned rates that, combined with pre-existing most-favored-nation tariff rates, totaled 10pc or 12.5pc.
The other 38 countries were assigned a 12.5pc rate. These include Vietnam, which issued a new decree this week that sets out more detailed rules banning imports of goods made with forced labour, and China – accused by the US of detaining Uyghur minorities in work camps, which Beijing denies.
Greer previously pledged that for countries with trade deals with Washington capping US tariff rates, the new forced labour duties would not push them above those caps – a point which the European Union noted in its response.
“The EU notes positively the fact that this outcome is in line with the US tariff commitments agreed under the EU-US Joint Statement,” a European Commission spokesperson said, adding it provided “positive momentum” to continue the work on exploring further tariff exemptions and deepening co-operation.
French Trade Minister Nicolas Forissier said that, while the legal basis raised questions, the tariffs nonetheless provided greater visibility for businesses. While disputing the allegations underlying the forced labour investigation, the Swiss government also said the United States was adhering to past commitments on tariff ceilings, in its case of up to 12.5pc.
The action drew stronger protests from some trade partners. China said it opposed all unilateral tariffs, adding that trade wars did not serve any parties.
Australia and Brazil described the new tariffs as unjustified and said they would seek to have them removed, while Norway said there was “no basis” for them.
Canada – hit on Monday with new Trump tariffs on $20 billion worth of goods – issued a muted response. “We will continue engaging constructively with the United States on this matter, as well as other outstanding issues, over the coming weeks to the mutual benefit of our citizens,” said Dominic LeBlanc, Canada’s minister in charge of US trade.
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