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Trading partners hit back at U.S. forced-labour tariff hikes

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Trading partners hit back at U.S. forced-labour tariff hikes

2026-07-24 13:33 UTCBy AlphaScala Research DeskSource reporting: investmentexecutive.comEditorial standards

Trading partners hit back at U.S. forced-labour tariff hikes

Australia, Japan, China and others reject U.S. forced-labour tariff hikes of 10% to 12.5%, calling them unjustified. Some exemptions soften the blow, but further duties may come this fall.

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U.S. President Donald Trump’s latest tariff increases drew objections Friday from China, Japan, Australia and other trading partners, who called the levies unjustified and harmful to trade.

The administration announced extra duties of 10% to 12.5% on 60 economies late Thursday, claiming the countries had failed to enforce a ban on goods made with forced labour. The new tariffs took effect as stopgap levies imposed after a Supreme Court defeat expired at 12:01 a.m. Friday.

Australian Trade Minister Don Farrell rejected the link between his country, a major exporter of beef, gold and copper, and forced labour. The tariff on Australian exports rose to 12.5% from the 10% applied after Trump’s “Liberation Day” hikes last year.

“We believe that amongst all of the countries in the world Australia does take the issue of slavery, modern slavery, seriously,” Farrell told reporters in Adelaide. He called the higher tariffs “completely unjustified” and said Australia would lobby the U.S. Trade Representative to remove them.

New Zealand Prime Minister Christopher Luxon said the 12.5% duty on his country was “extremely disappointing” and not supported by evidence. “Tariffs are not the way – they drive up costs and uncertainty for businesses,” he wrote on X.

European Union foreign policy chief Kaja Kallas questioned the U.S. stance. “If you compare our labour laws to the ones of the United States, I mean we have, people have paid vacations, we have very good conditions, labour conditions for our employees, so it’s not really grounded,” she told Channel News Asia.

Singapore’s Ministry of Trade and Industry, also facing a 12.5% tariff, said it would “continue to engage the USTR to explore options.”

Japan protested the same rate. Chief Cabinet Secretary Minoru Kihara said Tokyo had been reassured by the Trump administration that there would be no more tariffs beyond an earlier 10% agreement. “It is regrettable that the measure imposes tariffs on the grounds of non-existence of measures banning imports of goods made by forced labour, even though Japan’s industry and trade are in line with international rules,” he said.

South Korea’s trade ministry said the announcement eased some uncertainty but noted a Section 301 probe into alleged excess production continues. Combined duties on Korean exports should not exceed 15%, the ministry said.

Thailand, subject to the 12.5% tariff, noted the measure exempts roughly 2,120 items – more than half the value of Thai goods shipped to the U.S. Bangkok is also monitoring a separate U.S. probe into structural overcapacity against 16 countries, the Thai Commerce Ministry said.

China’s Ministry of Foreign Affairs said it “opposes all forms of unilateral tariffs.” Spokesman Lin Jian told a regular press conference that “tariff wars and trade wars do not serve any parties’ interests.”

Trade tensions have already cut Chinese exports to the U.S. sharply since last year’s “Liberation Day” tariffs. Trump and Chinese leader Xi Jinping, who agreed to set up new trade and investment boards at their mid-May meeting in Beijing, are expected to meet again in September.

Some Chinese exporters say the latest impact is limited because the new U.S. tariffs on China remain lower than last year’s 34% rates. “Of course it’d be best if they are not there,” said Richard Chan, manager of Golden Arts Gifts & Decor, which manufactures Christmas decorations in Dongguan. Its U.S. sales have already fallen to 10% to 20% of revenue, with Europe now accounting for roughly 70%.

Wendy Cutler, a former senior U.S. trade official, said the latest round involved “few surprises” since the rates run only from 10% to 12.5%. The USTR spent four months investigating the basis for the tariffs to meet legal requirements under Section 301 of the Trade Act of 1974. “Time will tell whether the third attempt to impose tariffs is the charm and this action stands up to legal challenges,” said Cutler, now at the Asia Society Policy Institute. She added that these duties are less likely than earlier ones to be overruled by U.S. courts.

Further tariffs may come in the fall related to alleged structural excess capacity, she noted.

William Bratton of BNP Paribas said in a research note that Washington is tending toward increased trade friction. “On the positive side, however, these tariffs are lower than the earlier reciprocal tariffs and appear to exempt a substantial proportion of Asia’s current trade flows with the U.S.,” he said.

The administration included many product exclusions, including for goods the U.S. does not produce, Cutler said. “This should reduce the impact of these duties. Nevertheless, they will contribute to higher prices both for end consumers and businesses importing inputs and machinery.”