Key Highlights

  • Trading partners from Australia to Brazil rejected the forced labor rationale behind the new US tariffs.
  • Most affected countries signaled they would continue negotiating rather than retaliate.
  • Brazil's new 12.5% tariff stacks on a separate 25% Section 301 tariff, rebuilding a barrier close to a rate struck down as unlawful last year.
  • No major trading partner has announced countermeasures over the forced labor tariffs.

Widespread Rejection of the Underlying Rationale

US trading partners from Canberra to Brasília rejected the forced labor rationale behind President Trump's new global tariffs, even as most signalled they would continue negotiating rather than pursue retaliation. The Office of the US Trade Representative took action under Section 301 of the Trade Act of 1974, imposing tariffs on 60 economies for what Washington characterised as their failure to impose and enforce bans on goods made with forced labor, with duties set at 10% for partners that had adopted or committed to import prohibitions and 12.5% for those that had not.

Australian Trade Minister Don Farrell called the tariffs unjustified and inconsistent with the countries' free trade agreement, stating Australia's measures to combat forced labor and modern slavery are among the strongest in the world and are recognised globally, including in the United States, for their leadership. Australia was among the countries hit with the higher 12.5% tariff, alongside China, Hong Kong, Singapore and South Korea.

Brazil and Chile Push Back Most Forcefully

Brazil, also hit with a 12.5% tariff, called the measure arbitrary and unjustified, with President Luiz Inácio Lula da Silva saying he remained open to negotiations but that Brazil would seek other markets if it could not sell into the United States. The new duty stacks on a separate 25% Section 301 tariff imposed on Brazilian goods earlier in the month, rebuilding a combined 37.5% barrier that approaches the 50% rate courts had previously struck down as unlawful.

Chile's government said the measure was inconsistent with the country's labor standards and the technical, political and legal evidence it had submitted throughout the investigation, according to a statement from the trade undersecretariat in Santiago, which noted the US resolution does not even allege Chile exports goods made with forced labor and said it would press for exclusions covering key export products.

Milder Responses From Canada and New Zealand

Canada, placed in the lower 10% tier with an exemption for USMCA-compliant goods, struck the mildest tone among affected partners. Minister for Canada-US Trade Dominic LeBlanc said the move was not unexpected, adding that Ottawa shares Washington's objective on forced labor and would continue engaging constructively in the coming weeks. New Zealand's foreign ministry said its trade minister had made clear Wellington disagrees with the investigation's findings and would continue to register that position with the US government, though existing exemptions covering roughly 30% of New Zealand's US-bound exports, including beef and kiwifruit, remain unchanged.

The Economist Intelligence Unit's senior economist said the impact on major Asian economies is likely to be limited, since the region continues to benefit from tariff carve-outs covering most types of electronics, from consumer devices to chips, goods that have consistently been exempt under tariffs imposed during the current administration.

Analysts Question the Underlying Purpose of the Investigation

The Peterson Institute for International Economics wrote earlier in the week that the investigation is not a labor-standards exercise but rather a mechanism for exporting America's import ban on Chinese goods, as well as an attempt to recreate the tariff regime the Supreme Court had struck down. This assessment aligns with the observation that no major trading partner has announced countermeasures over the forced labor tariffs, suggesting most governments view the measure as a legal and political manoeuvre rather than a genuine labor standards dispute worth escalating into a broader trade confrontation.

Conclusion

The broad rejection of the forced labor rationale by trading partners, combined with the near-universal decision to pursue continued negotiation rather than retaliation, suggests most governments are treating the tariffs as a largely unavoidable legal and political reality rather than a dispute worth escalating. Whether this restrained response persists may depend on how the tariffs affect actual trade flows in the coming months, and whether the underlying Section 301 legal foundation proves more durable against future court challenges than the mechanism it was designed to replace.