Australia faces new US tariff threat over forced labour goods

Australia could be hit with a new 12.5 per cent US tariff after the Trump administration accused dozens of countries of failing to crack down on goods made with forced labour.

The proposed tariff was announced by the US Trade Representative (USTR) on Wednesday, as part of an investigation into what Washington says are unfair trade practices by 60 countries.

Australia is among 45 countries facing the higher 12.5 per cent rate, alongside China, Japan, India, South Korea, Brazil and Switzerland.

Another group, including Canada, Britain, the European Union and Mexico, would face a lower 10 per cent duty.

US Trade Representative Jamieson Greer said the US would "no longer tolerate" countries that failed to address forced labour in their supply chains.

"The failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable," Mr Greer said.

The USTR also proposed a textile mechanism that would allow for a certain volume of clothing and textile imports to enter the US at a reduced tariff rate, although details have not yet been released.

A spokesperson for the Trade Minister said Australia maintained that any tariffs on Australian exports to the US were "unjustified" and inconsistent with the Australia-US Free Trade Agreement.

The spokesperson said Australia had "robust, comprehensive and world-leading legislation" addressing forced labour and modern slavery, and would continue to advocate that US tariffs imposed on Australia were "unwarranted".

The proposed tariffs would not take effect immediately. The proposal will undergo a public consultation process, with hearings due to begin on July 7.

China says forced labour claims are an 'excuse'

The US proposal came ahead of the July 24 expiry of a temporary 10 per cent tariff imposed by the Trump administration after the US Supreme Court struck down a separate set of tariffs introduced under the International Emergency Economic Powers Act (IEEPA).

The court ruled Mr Trump had exceeded his authority by using the law to impose sweeping tariffs on US trading partners. The administration has since said it would appeal a ruling that would make companies eligible for refunds on those duties.

The USTR investigation was conducted under Section 301 of the Trade Act of 1974 and found all 60 countries examined — including Australia — had failed to adequately enforce bans on imports made with forced labour.

In its nearly 100-page report, the USTR defined forced labour as "work or service exacted from a person under the menace of any penalty for its nonperformance and for which the worker does not offer himself voluntarily".

It cited estimates from the UN's International Labour Organisation that 27.6 million people were engaged in forced labour worldwide in 2021.

Products identified as being at risk of involving forced labour included rice from Myanmar, tobacco from Malawi, beef from Brazil, and cotton and polysilicon from China.

The USTR said that even where countries banned forced labour domestically, importing goods produced using forced labour undermined fair trade rules.

The US has long argued that goods linked to China's far-western Xinjiang region are at risk of involving forced labour. Beijing rejects those allegations.

Chinese Foreign Ministry spokesperson Mao Ning denied the latest claims and called for economic disputes to be resolved through dialogue.

"There is no such thing as forced labour in China, and we oppose using it as an excuse to engage in political manipulation," she said in Beijing.

Earlier this week, the US administration separately proposed 25 per cent tariffs on imports from Brazil, alleging the country's trade practices were "unreasonable'' and burdened US commerce.

In the forced labour findings, the USTR said it would exempt from the tariffs a number of products, including energy, rare earths and certain other metals, beef, coffee, certain fruits and vegetables, and pharmaceuticals.