US trade rep warns new forced-labor tariffs coming 'soon' on 10% base

The US Trade Representative said new tariffs on countries that use forced labor will be announced "soon," expanding the trade war beyond the 10% global levies imposed in February after the Supreme Court struck down the earlier Liberation Day tariffs.

"The administration is actively reviewing forced labor practices in multiple countries and will impose corresponding tariffs as a punitive measure," the Trade Representative's office said in a statement. The official did not identify which nations or products would be targeted, nor the tariff rate under consideration.

The announcement follows the 50% tariffs on Canadian goods imposed July 20 under Section 338 of the Tariff Act of 1930, covering products from wine and dairy to hockey sticks and cement. Canada, one of the largest US trading partners, has previously retaliated with 25% duties on American automobiles. The 10% global tariffs, implemented under a law allowing levies to remain in effect for 150 days while the US assesses major trade imbalances, are set to expire or require renewal by mid-August.

The escalation risks reigniting a trade war that has already raised costs for US importers and triggered retaliatory measures from trading partners. Canadian Prime Minister Mark Carney has defended Canada's trade actions, arguing the country has "merely matched" US tariffs, while the Financial Times' Robert Armstrong coined the term "TACO trade" — "Trump always chickens out" — to describe investor expectations that Trump will reverse course.

The forced-labor tariff threat adds a new dimension to a trade agenda that has already reshaped US import patterns. The 10% global tariffs, imposed in February after the Supreme Court overturned the Liberation Day tariffs that had relied on IEEPA authority, marked the broadest US trade action in decades. Those levies remain in effect for 150 days under the statutory timeline, giving the administration until roughly mid-August to either renew or replace them. The last time the US imposed tariffs of this scope was under Section 301 of the Trade Act of 1974, when the first Trump administration levied duties on roughly $370 billion in Chinese goods between 2018 and 2020.

The 50% tariffs on Canada, announced July 20, targeted what the White House called "discriminatory" Canadian trade practices on alcoholic beverages, automobiles and dairy products. All but two Canadian provinces have halted purchases of US alcohol, while Canada imposed auto tariffs exclusively on American vehicles and established tariff-rate quotas on US cheese more restrictive than its policy with the European Union, officials said. Energy, potash, fish and critical minerals were exempted from the US action — a carve-out that preserved roughly $130 billion in annual bilateral energy trade.

Canadian Prime Minister Mark Carney defended his country's trade actions, arguing Canada has "merely matched" the tariffs and trade policies imposed by the United States. "This trade dispute has raised costs for families, particularly in the U.S.," Carney said in a statement. The Financial Times' Robert Armstrong coined the term "TACO trade" in May 2025 to describe how some investors anticipate market rebounds as Trump's on-again, off-again tariff policies unfold — an acronym for "Trump always chickens out."

The new forced-labor tariffs represent a separate track from the Canada dispute. Trump had previously suggested tariffs as compensation for Canadian wildfire smoke impacting the US, but said July 21 that was not the motivation behind the most recent tariff order. "We're looking at that separately," he told reporters in the Oval Office, adding that nearly 900 active fires were burning in Canada as of late July.

The Trade Representative's office did not provide a timeline for the forced-labor tariff announcement beyond "soon," nor did it specify which countries or products would be affected. The administration has previously cited Section 338 of the Tariff Act of 1930 as legal authority for the Canada tariffs, a law that allows retaliatory duties against countries deemed to discriminate against US commerce. The forced-labor review appears to rely on a different legal basis, potentially the Tariff Act's Section 307, which prohibits imports of goods produced by convict or forced labor.

This article is for informational purposes only and does not constitute investment advice.