Trump’s tariffs have a new target. The case behind it is complicated

Since the Supreme Court struck down President Donald Trump’s sweeping global tariff plan, the White House has set its sights on alternative ways to achieve the centerpiece of Trump’s trade war agenda. One of these new pathways was announced last week, when the Office of the U.S. Trade Representative (USTR) proposed new tariffs of up to 12.5% ​​for 59 countries and the European Union, based on Section 301 of the 1974 Trade Act.

Justification: USTR alleges widespread failure to restrict imports of goods produced using forced labor.

“The failure of our most important trading partners to address imports of goods made using forced labor is unacceptable,” Trade Representative Jameison Greer said. he said. x post announced the tariffs. “This creates a dynamic in which American workers are forced to compete globally on an uneven playing field,” he wrote.

Forced labor is a widespread global problem. Although almost universally approved International Labor Organization (ILO) convention Forced labor continues in global supply chains due to the suppression of the practice. Most ILO’s latest estimates He states that 27.6 million men, women and children are victims of this practice every day. Around 86% While the majority of labor occurs in the private economy, the remaining 14% arises from state-imposed indentured servitude.

Approximately $236 billion According to the ILO, illegal profits are generated worldwide from forced labor each year, resulting from frequent use in the industrial, services, agricultural and domestic sectors. Occupations such as mining, quarrying, manufacturing and food services generate significant illegal profits ranging up to $4,944 per victim.

U.S. legislation restricting forced labor practices is among the strictest in the world, dating back almost a century. Chapter 307 The US Tariff Act of 1930 directly prohibits imports using forced labor. UFLPA It restricts imports from China’s Xinjiang Uyghur Autonomous Region under a sweeping “presumption of respect” against forced labor.

Over time, domestic standards such as these began to influence international trade policy, most recently with the North American free trade agreement USMCA and latest ARTs including provisions prohibiting the importation of forced labor goods. These agreements are multilateral in nature and are clearly different from unilateral Section 301 tariffs.

US struggles to enforce its own forced labor laws

The United States is a focus of forced labor concern due to the volume of goods coming into the country of questionable origin. A. 2025 report From the National Security Operational Analysis Center (HSOAC), which analyzed US import data, found that the US accounts for a disproportionately large share of all direct imports of at-risk goods globally (goods that the Bureau of International Labor Affairs believes are at high risk of being produced with forced labor). “For example, in 2021, while the USA accounted for approximately 23 percent of these imports in terms of value, it realized only 13 percent of all global imports,” the report stated.

The United States has struggled to effectively enforce its own laws regarding forced labor goods.

The recent Congressional review of Section 307 does not shy away from citing challenges to implementing the statute, including “fraud in the import process, expansion of direct-to-consumer e-commerce, and limited access to technologies that improve supply chain traceability.”

Congressman Dan Bishop noted: 2023 Congressional hearing More than a year after the law took effect, goods produced with forced labor in Xinjiang are still entering the U.S., the federal UFLPA enforcement said.[Customs and Border Protection] “We conducted isotopic tests on clothing samples and found that 15 percent of the items tested positive for cotton from Xinjiang,” Bishop told the hearing. he said.

Customs and Border Protection has made extensive efforts to reduce the entry of forced labor into the United States. A 2023 CNBC report on supply chain activities found that CBP detained $961 million worth of goods at the Port of New York and New Jersey in less than a year. The agency targeted goods at risk through a number of internal mechanisms, including relying on national intelligence information and “specialist cargo targeting systems,” according to Deputy Port Director Edward Fox.

Importers whose goods are subject to CBP inspection must provide conclusive evidence that the goods in question were produced without the use of forced labor. usually within 30 days custody. However, this is not a simple process and millions of dollars worth of cargo can be detained by CBP at a time, disrupting the consistency and profitability of product supply. Combined with warehousing and legal fees, companies often find themselves under great financial pressure as they try to prove fair labor practices throughout sourcing.

Due to globalized production, it can be difficult to trace labor throughout the supply chain. For example, a large garment or automotive manufacturer may source materials for its products from several intermediaries working independently.

“Intermediaries can sell goods to large buyers at the same rate as if they were engaging in fair business practices,” said Desirée LeClerq, an assistant professor at the University of Georgia School of Law who specializes in international trade and labor law and has been at the forefront of research on Section 301 and its effects.

LeClerq noted that much of the illegal profits from forced labor in production come from middlemen. “The difference between production costs and selling price is taken as profit by the middleman.”

LeClerq noted that this is not the only way to make illegal profits from forced labor, but it is a way that both perpetuates forced labor practices and conceals its existence.

Brandon Daniels, CEO of Exiger, which provides supply chain and third-party risk management and compliance solutions to more than 150 Fortune 500 companies and more than 60 government agencies, including the U.S. Department of Defense and U.S. Customs and Border Protection, told CNBC earlier this year that many companies now go directly to suppliers and use their purchasing power to draw up contracts that specify where supplies can be made. “But this is just undercutting the service on how to monitor forced labor,” he said.

He alleges that Chinese companies used forced labor during the trade war to push cheap products to secondary countries with advantageous tariff rates and then reroute those goods to the United States or other markets. “This is financial abuse,” Daniels told CNBC.

Legal challenges are likely

Legal experts say the imposition of unilateral tariffs on 60 economies at the same time is unprecedented. Past applications of Section 301 It has been refined and used on a case-by-case basis to target different areas of concern in international trade policy. But Trump has increased the use of the trade law measure since he first became president. Before 2017, Section 301 was largely used as leverage for the United States in international trade disputes. While Trump launched six investigations in his first term, President Biden launched only three; he started two of them in his last month in office.

The timeline of this USTR investigation has also come under scrutiny. Section 301 investigations are generally given a 12-month period after they begin to prepare final reports. This comprehensive round of research produced findings on all 60 economies in less than three months.

The timeline isn’t the only notable part of the investigation. Legal experts also noted that the U.S. claims were made despite the difficulties the United States faces in combating forced labor.

“I actually felt a little sorry for USTR, because to show that Section 301 had been violated, you had to argue two things,” said LeClerq, who laid out his issues with USTR tariffs. a post Last week for the International Economic Law and Policy Blog. “First of all, he had to claim that forced labor goods were still entering the United States, because if he can’t say that, then he can’t say that our producers are either.” [being] was damaged. [Next,] “He had to argue that CBP was doing a very effective job to show that it was the lack of effectiveness in other countries that put the United States at a disadvantage.”

The administration’s launch of Section 301 investigations “represents a deliberate effort to create a durable, legally defensible foundation for broad-based tariffs that are not dependent on emergency powers or congressional reauthorization,” Ryan Last and partner Daniel N. Anziska of Troutman Pepper Locke wrote in an analysis last week.

USTR will inevitably seek to invoke the statute’s own language, which expressly authorizes the agency to use tariffs as a retaliatory measure against forced labor practices.

But while Part 301-based tariffs have more legal basis than those issued under IEEPA, the way they are set forth can complicate their validity.

“The new legal theories underlying this Section 301 action—particularly the argument that the absence of a foreign import ban constitutes an ‘unreasonable’ practice—will likely face judicial challenge,” they wrote.

“Guaranteed,” LeClerq said when asked if these Section 301 tariffs would end up in court in the near future.