Trump’s New ‘Forced Labor’ Tariffs Are a Fig Leaf

Get audio access with any FP subscription. The Trump administration this week unveiled its latest plan to hike tariffs, this time focused on the ostensible harms that the prevalence of forced labor in global supply chains do to U.S. commerce. The latest action would levy tariffs of 10 percent to 12.5 percent on 59 countries and the European Union (making up 99 percent of all U.S. trade), all of whom, the Trump administration says, are lax about regulating forced or compulsory labor in their supply chains. The Trump administration this week unveiled its latest plan to hike tariffs, this time focused on the ostensible harms that the prevalence of forced labor in global supply chains do to U.S. commerce. The latest action would levy tariffs of 10 percent to 12.5 percent on 59 countries and the European Union (making up 99 percent of all U.S. trade), all of whom, the Trump administration says, are lax about regulating forced or compulsory labor in their supply chains. But every trade expert and lawyer understands that the latest use of Section 301 of the 1974 Trade Act—even more than the use this spring of Section 301 to combat “excess capacity” in other economies—is simply another way for U.S. President Donald Trump to levy tariffs after the Supreme Court struck down his sweeping global tariffs earlier this year. “The ‘findings’ are in many ways what many of us expected: an excuse to levy across-the-board tariffs,” said Inu Manak, a trade expert at the Council on Foreign Relations. “Why not just target tariffs on those specific products where forced labor is present? It seems to be a solution in search of a problem.” What is especially noteworthy about the latest broadside from the U.S. Trade Representative (USTR) against trade is how unsubstantiated it is, as was made clear during days of hearings earlier this year, written comments by affected countries and industries, and the USTR’s own tortured report on its “findings.” In a nutshell, the USTR claims that no other country polices the import of goods that may have been made using forced or compulsory labor the way the United States does, and that that surely means that U.S. companies are being harmed somehow, either being disadvantaged as exports or hurt by imports into the U.S. economy. It just can’t say exactly how. “The effects of unfair competition from forced labor goods on the sales, revenues, exports, and profitability of U.S. producers are evident but may be difficult to distinguish from other factors or discern in data,” the USTR wrote in its final determination. The argument the USTR makes is that countries that use compulsory labor sell their goods at lower cost into markets that don’t police the provenance of imports, thereby crowding out higher-priced U.S. imports. At the same time, the USTR argues that companies in those economies then export their own stuff to the United States, adding to the woes of beleaguered U.S. firms. It pointed to a range of possible examples including tobacco from Malawi, frozen beef from Brazil, and rice from Myanmar as unfairly competing with U.S. products. The overarching head-scratcher with the new tariffs is that the USTR said in its final report that the cost of compliance for U.S. firms with provisions meant to trace supply chains for any evidence of forced labor amounts to the equivalent of a 2.5 percent tariff, and yet proposes a tariff four to five times higher as a remedy. But trade and labor experts point to a number of other problems with the latest batch of tariffs. For starters, the entire premise is that the U.S. approach to regulating the import of products made with forced labor is effective and worth emulating—and countries that don’t do exactly what the United States does are acting “unreasonably” and thus deserve to face higher import duties. The only way to satisfy U.S. demands is to adopt the U.S. approach, even though other economies, such as the European Union, have in hand a much more thorough program to regulate the import of potentially dodgy goods that will be rolled out next year. “The thing that is most concerning is that it appears there is no way to address U.S. concerns short of copying and pasting U.S. law in the countries targeted, and then somehow finding a way to show it is being implemented,” Manak said. “Since Section 301 puts the power to determine whether or not demands are being met in the hands of USTR, it is entirely subjective and arbitrary.” That approach would at least make some sense if the U.S. crackdown on forced labor were effective. But it is not, despite a raft of laws on the books going back nearly a century. According to the Global Slavery Index, the United States is far and away the country most at risk from imports from forced labor, with its $197 billion in sketchy imports dwarfing every other country that the USTR has targeted for punitive action. The USTR in its determination takes particular aim at the half-dozen countries that do have laws

Trump’s New ‘Forced Labor’ Tariffs Are a Fig Leaf

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Trump’s New ‘Forced Labor’ Tariffs Are a Fig Leaf

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