Labor & Employment Law Daily Wrap Up, ECONOMIC NEWS—States challenge USTR forced-labor tariff proposal, (Jul 10, 2026)

By Patricia K. Ruiz, J.D.

The multistate coalition says combating forced labor requires targeted enforcement, not sweeping tariffs.

A coalition of 22 state attorneys general, joined by Connecticut Attorney General William Tong, urged the Office of the United States Trade Representative (USTR) in a letter to withdraw a proposal to impose tariffs on imports from 60 economies based on alleged failures to prohibit or effectively enforce bans on goods produced with forced labor. While emphasizing their opposition to forced labor and support for efforts to keep forced-labor goods out of U.S. supply chains, the states argue that the proposal exceeds USTR's authority under Section 301 of the Trade Act of 1974 and is unlikely to achieve its stated labor-enforcement objectives.

Forced labor at the center of the dispute. The controversy stems from a USTR investigation into whether foreign governments have failed to prohibit or effectively enforce restrictions on goods produced with forced labor. On June 2, USTR determined that the acts, policies, and practices of 60 economies relating to forced-labor import controls were unreasonable and burdened or restricted U.S. commerce, rendering them actionable under Section 301.

According to USTR's findings, 54 economies allegedly failed to impose and effectively enforce a forced-labor import prohibition, while six economies allegedly failed to effectively enforce existing prohibitions. The investigation encompasses major U.S. trading partners, including the European Union, Canada, Mexico, the United Kingdom, Japan, South Korea, and Australia.

Proposed labor-related trade measures. As a remedy, USTR proposed additional duties of 10 percent on economies that maintain, or have committed to maintain, forced-labor import prohibitions and 12.5 percent on other investigated economies. The proposal also includes a textile mechanism allowing certain apparel and textile imports to enter the United States at reduced Section 301 tariff rates. The attorneys general argue that the proposal would affect economies accounting for approximately 99.4 percent of U.S. imports and would apply broadly across imported products rather than focusing on goods specifically linked to forced labor.

Effectiveness of tariffs as a labor-rights tool. Although the coalition states that goods produced with forced labor should be barred from U.S. ports, the attorneys general contend that USTR has failed to demonstrate how the proposed tariffs would reduce forced labor. The letter argues that the agency's report does not establish a connection between the tariff rates and the goal of eliminating forced-labor practices or explain why tariffs of 10 percent and 12.5 percent would be appropriate across dozens of economies with different legal systems, labor-enforcement frameworks, and compliance efforts.

The coalition further argues that the proposal treats economies with existing forced-labor import bans similarly to economies that lack such measures, despite significant differences in their labor-regulatory regimes and enforcement capabilities. According to the attorneys general, the proposal does not adequately explain why largely uniform tariff rates would encourage compliance across such varied circumstances.

Comments and testimony favor alternative approaches. The attorneys general's letter relies heavily on comments and hearing testimony submitted during the Section 301 proceeding. According to the coalition, foreign governments, labor-rights advocates, manufacturers, trade associations, and other stakeholders argued that broad tariffs would be less effective than cooperative approaches focused on enforcement, transparency, technical assistance, and supply-chain oversight.

The letter cites testimony asserting that access to U.S. markets can encourage trading partners to strengthen labor standards and enforcement mechanisms. The attorneys general contend that broad tariffs may instead reduce incentives for cooperation and divert resources away from labor-rights reforms and compliance efforts.

Concerns about workers and supply chains. The coalition also points to testimony from U.S. businesses and industry groups asserting that tariffs would increase costs for companies that already invest in efforts to keep forced labor out of their supply chains. According to the comment letter, witnesses argued that tariffs function as a cost imposed on U.S. importers and could affect businesses that are already undertaking labor-compliance and supply-chain monitoring efforts.

The attorneys general further cited concerns that tariffs on intermediate goods and products lacking domestic substitutes could disrupt manufacturing supply chains and increase costs for downstream industries. They argue that broad duties may ultimately hinder, rather than advance, efforts to improve labor standards by weakening commercial relationships that encourage compliance and reform.

Public hearings underway. USTR's review process has moved into the hearing phase. Public hearings were held July 7-9 at the U.S. International Trade Commission in Washington, D.C., with participants including foreign government officials, labor-rights organizations, manufacturers, trade associations, and other stakeholders. The hearings were organized into 20 panels.

Scheduled participants included representatives from labor-focused organizations such as China Labor Watch and the Human Trafficking Legal Center, alongside industry groups, business coalitions, and foreign government representatives.

Multistate coalition. The comment letter was led by the attorneys general of Oregon, California, and Arizona and joined by attorneys general from Connecticut, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Washington, Wisconsin, and 13 other states. The coalition urged USTR to pursue alternative strategies to combat forced labor in global supply chains rather than moving forward with the proposed tariffs.

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