Here Comes Another Round of Sham Tariffs

In the coming days, one set of dubious replacement tariffs will give way to another. The “Section 122” tariffs that President Donald Trump imposed this spring—intended to replace the “emergency” tariffs the Supreme Court invalidated in February—expire Friday, 150 days after he invoked them. Into that potential void will likely step a fresh batch of “Section 301” duties, supposedly targeting the use of “forced labor” around the world.

As we’ve discussed, the issue of forced labor is real and complicated. Walk Free, a human rights group that tracks it, estimates that as of 2023 roughly 28 million people were in some form of forced labor worldwide, and the International Labor Organization puts about 5.5 million in tradable-goods industries. Even free marketers like me readily admit that trade in goods made by forced labor isn’t really “trade”—voluntary, mutually beneficial exchange—at all.

In the current Section 301 case, however, “forced labor” is nothing more than legal cover. As Rick Woldenberg, CEO of Learning Resources and a lead plaintiff in one of the Supreme Court tariff cases, wrote when the investigation was launched, the case looked like a “sham” from the start because “the decision to impose these taxes has already been made.”

What the Trump administration eventually produced has sadly proven Woldenberg right.

The findings were clearly predetermined. The methodology is thin to the point of embarrassment. The remedy is both ridiculously blunt and wildly out of proportion to any measurable economic distortion. The action gives targeted countries no way to get the tariffs lifted by eliminating their supposedly bad behavior. And the whole thing establishes precedent for an “automatic tariff generator” that Trump or a future president can deploy at will. It makes a mockery of a real issue and might poison legitimate reform. And Congress probably won’t do anything about it.

Background.

After the Supreme Court invalidated the administration’s “emergency” IEEPA tariffs in February, the White House scrambled for a replacement. It reached first for Section 122 of the Trade Act of 1974, a rarely used balance-of-payments provision, to slap a flat 10 percent tariff on goods from nearly every trading partner. Those tariffs are legally and economically dubious, a lower court has already knocked them down (the case is on appeal), and by design they expire 150 days after imposition—a deadline that arrives tomorrow.

U.S. Trade Representative Jamieson Greer has suggested the administration might simply announce another “balance of payments crisis”—and another round of Section 122 tariffs—when the current ones end Friday, but that raises even bigger legal problems than the current taxes have. Thus, eventually, Section 301 will take over. The only question is when. (Don’t you just love policy uncertainty! Sigh.)

Unlike Section 122, Section 301 requires an actual investigation, public notice and comment, and a formal report before the executive branch can act. Under the statute, the U.S. trade representative may respond to foreign “acts, policies, and practices” that are “unreasonable or discriminatory” and that “burden or restrict” U.S. commerce, with “unreasonable” acts being those that are “unfair or inequitable.” As I wrote in a 2022 paper, this is dangerously broad and ambiguous language that’s ripe for abuse—abuse the Trump administration is now undertaking in the forced labor case.

Yes, it’s a reverse-engineered sham.

In June, Greer’s office closed its investigation, finding that 54 economies had failed to impose any prohibition on imports made with forced labor and that six more had failed to enforce the laws they had on the books. The agency recommended tariffs of 12.5 percent on goods from 46 of the lawless (ha) economies and 10 percent on goods from 14 more (the six with allegedly inadequate enforcement and eight more that had pledged to implement prohibitions under their Trump trade deals). Collectively, the targeted countries constitute nearly everything the United States imports.

USTR’s stated justification is that these economies’ failure “to impose and effectively enforce a forced labor import prohibition” is “unreasonable” and a burden on U.S. commerce, “by subjecting U.S. producers to unfair competition from forced labor goods both in export markets and the U.S. market, and by displacing foreign goods produced without forced labor or forced labor inputs into the United States and other markets.”

Strong words. There are several reasons to doubt that USTR really means any of it.

The administration said the tariffs were coming before the investigation ended.

Under Section 301, USTR is supposed to investigate first, decide later, and—if all else fails—impose countermeasures to push a foreign government to fix its burdensome or “unfair” trade practice. One can argue about whether a given case’s findings and recommendations are correct, but we can all agree that—as plainly stated in the law itself—the conclusions aren’t supposed to be written in advance.

Here, by the administration’s own admission, they were.

Long before the forced-labor investigation closed, Treasury Secretary Scott Bessent repeatedly said the tariff revenue would be “back in place at the previous level” by the time the Section 122 duties lapsed this month, and administration officials have described the Section 301 push as a way to recover the revenue lost when the Supreme Court struck down IEEPA. Trump himself said much the same right after the court issued its ruling, noting that, along with Section 122, “We are doing the various investigations necessary to put fair tariffs—or tariffs, period—on other countries.” A few weeks later, USTR Greer confirmed the timeline, saying he hoped to conclude the investigations “before the 10 percent tariffs imposed by President Trump in February under Section 122 expire in July.”

When the president, the treasury secretary, and the United States trade representative all confidently promise that a case will produce a certain result before it’s finished, the “investigation” part is a formality—boxes to be checked for legal cover and nothing more.

The forced-labor report is remarkably thin.

The report itself reinforces this conclusion. For a document meant to justify tariffs on more than $1 trillion of trade with 60 countries (including several close U.S. allies), the report is nearly devoid of evidence. For example, USTR offers essentially no proof that the targeted countries actually export goods made with forced labor. In most cases, the report simply notes that a country lacks an express ban on goods made from forced labor and then simply assumes certain “forced-labor goods” are getting through. The entire country-specific assessment totals just 31 pages—around half a page per country—and much of that is just the same empty passages copy-pasted dozens of times. And USTR even admits that foreign governments and private companies “may perform forced labor due diligence” and protect against trade in forced labor without an express legal requirement to do so. Its only retort is that “some” might not—hardly ironclad evidence of wide-scale wrongdoing and harm.

The agency also offers no proof or analysis of its central assertions that forced labor creates “unfair export competitiveness,” or that forced-labor goods undercut U.S. producers (and thus meet the law’s requirements for remedying a supposed “burden” or “restriction” on U.S. commerce). In reality, a firm that uses forced labor might sell at market prices and pocket any savings from using low- or no-wage labor. In the largest recent U.S. forced-labor prosecution, in fact, the Georgia “Blooming Onion” case, the alleged offenders—some in the U.S. and some in Latin America—did this very thing, netting more than $200 million by paying trafficked farmworkers pennies but selling produce at ordinary prices. The beneficiary was the trafficker, not American shoppers getting ultracheap groceries (at law-abiding competitors’ expense). In the Section 301 report, however, USTR simply assumes that the opposite occurs, harming American producers in the process.

There’s likewise no explanation for the blanket tariff rates assigned to targeted countries. Most egregiously, USTR gave the same 12.5 percent tariff rate to Angola, Libya, Russia, Venezuela, and Kazakhstan—developing countries that rank low on the Walk Free forced labor index (and have other issues!)—as it did to developed, “good actor” countries like Norway, Japan, Switzerland, and Australia. Why? USTR never says, nor does it explain its proposed reduced tariff rate for certain imports of apparel and textile products, which are among the most common manufactured goods linked to forced labor globally. (Spoiler: Ask the lobbyists.) Instead, the proposed tariffs just so happen to approximate the expiring Section 122 rates and the various “deals” the administration has struck over the past year. And they just so happen to include most of the same exemptions—for politically sensitive goods and for products already hit by other tariffs—that the IEEPA and Section 122 regimes contained.

I’m sure it’s all just a coincidence.

The United States is itself hardly a forced labor angel.

Meanwhile, findings that USTR does provide often run from questionable to absurd. Most notably, the United States isn’t exactly in a great position to lecture other countries about forced labor. Section 307 of the Tariff Act of 1930 has banned imports made with forced labor since 1930, but it was lightly enforced for more than 80 years due to a wide “consumptive demand” exception that allowed imports of goods not domestically produced “in such quantities as to meet U.S. consumption needs.” Congress narrowed this exception in 2022 to target goods made in Xinjiang, China (via the Uyghur Forced Labor Prevention Act), but this change still wasn’t a global sourcing ban. Just as importantly, the Trump administration’s enforcement of Section 307 appears to be more lenient than it was under Joe Biden. According to a recent letter from Oregon Sen. Ron Wyden, in fact, the U.S. Forced Labor Enforcement Task Force hasn’t added a single firm to the UFLPA “entity list” since January 2025, and U.S. Customs detained just $166 million in shipments under the UFLPA last year, down from roughly $1.76 billion in 2024 and $1.42 billion in 2023.

By Walk Free’s own index, moreover, the United States is actually worse on forced labor than almost half (26) of the countries on USTR’s tariff list. (Treat the EU bloc as a single economy, and America still lands in 19^th place.) Indeed, the U.S. is somewhat unique globally in that our Constitution contains an explicit carve-out for prison labor, which exists today across the country. As the Marshall Project just reported, “Incarcerated workers are responsible for producing over $2 billion in goods annually” and are typically paid less than a dollar per hour (or aren’t paid at all). A lot of this work is for government entities like schools and the DMV, but, as the Associated Press found in 2024, a good chunk of it ends up in private, open markets and even “in the supply chains of goods being shipped all over the world via multinational companies, including to countries that have been slapped with import bans by Washington in recent years for using prison and forced labor themselves.” The Trump administration, for its part, doesn’t seem too worried about any of these forced labor goods.

The tariff cure dramatically overshoots the forced labor disease.

Even assuming the targeted countries were truly at fault, the remedy proposed by the United States is orders of magnitude too big. As already noted, the U.S. government bans imports produced by forced labor, and these restrictions have—even during the tougher Biden years—targeted just a tiny share of all U.S. imports. Trump’s new tariffs, on the other hand, target trillions.

The UFLPA totals, of course, don’t capture the total extent of forced labor on U.S. commerce because some imports could (and surely do) slip through various cracks. But back-of-napkin estimates indicate that, while forced labor is a serious issue, its aggregate effects on the U.S. economy are microscopic compared with the tariffs being proposed.

Using Walk Free’s latest forced-labor estimates (from 2023), global manufacturing employment data from the International Labor Organization, and U.S. government import figures, we can approximate both forced labor’s share of the global manufacturing workforce and the amount of global goods trade that plausibly originates from forced labor. We found the overall share of forced labor in the manufacturing workforce of the 60 targeted economies to be 4.16 percent (17.8 million out of 426.9 million workers in all) and multiplied that by the $2.46 trillion in manufactured goods that the U.S. imported from these countries in 2023 (the last year of forced labor data). Even generously assuming that every forced laborer in a targeted country’s private sector works in manufacturing and that everything they make is either exported to the United States or competing with U.S. exports in other markets, that’d give us an absolute ceiling of just $102 billion in “tainted” goods out of the $3.05 trillion that entered the U.S. in 2023 (around 3 percent) and the $26 trillion in goods traded worldwide last year (0.4 percent).

This estimate is obviously an overshoot, and USTR’s own theory of harm is much narrower. Its report claims that the requisite injury to U.S. commerce is the competitive advantage that forced labor confers on goods made therefrom (i.e., the costs a firm avoids by not paying its workers market wages and complying with labor regs). If we assume that labor is around 15 to 25 percent of a firm’s total manufacturing cost, we can estimate that the “avoided-wage advantage” embedded in that $102 billion is between $15 billion and $26 billion. So, a tariff actually designed to offset that distortion, which is what Section 301 calls for and what USTR’s report describes, would work out to less than 1 percent (0.5 to 0.84 percent, for those keeping close score at home).

USTR wants 10–12.5 percent.

These are obviously just rough calculations with lots of assumptions, but other estimates reinforce the conclusion that the tariffs are way too big. Most notably, Peterson Institute economist William Cline applied a different model to estimate both the U.S. exports lost to unfair forced-labor competition in OECD markets and the direct cost of forced-labor goods entering the United States. His result—lower, as expected from a macro model measuring total trade distortion as well as the dilution of forced-labor inputs in the global value chain—suggests a warranted forced-labor tariff just 0.23 to 0.25 percent.

Just looking at tariff revenue gives us the same result. According to the Committee for a Responsible Budget, the Section 301 tariffs could raise around $97 billion annually over the next decade—an amount that dwarfs a “forced labor distortion” that’s measured in the low billions (or less).

Three different methods all give the same conclusion: This is Trump tariff replacement with a human-rights label glued on top.

There’s no off-ramp.

In response to these calculations, USTR might argue that forced labor is so odious that it warrants a deliberately punitive tariff to force international compliance, proportionality be damned. Yet, even leaving aside that this isn’t the theory USTR advanced (or what the law says), it’s flatly contradicted by the tariffs’ design. In particular, the proposed 301 action offers no compliance off-ramp for targeted countries and conspicuously skips several developing countries (e.g., Turkmenistan, Malawi, and Mauritania) that trade with the U.S. and have serious and documented forced-labor problems.

Section 301 directs USTR to target foreign practices that injure U.S. commerce and to achieve a change to or the removal of the offending policy (some history here). If these tariffs really were about eliminating forced labor, USTR would offer to completely remove the tariffs if targeted countries implemented new laws or demonstrated tighter enforcement. (Indeed, Canada, the European Union, and Mexico all maintain or are implementing forced-labor import bans, and the EU’s arguably reaches further than America’s.) Yet USTR offers no benchmarks that a country could meet to see the tariffs eliminated. A country could even adopt the United States’ exact forced-labor framework and still see its imports tariffed—because tariffs are the point.

Here’s how this is supposed to work.

Perhaps the best way to understand the forced labor tariffs’ emptiness is simply by comparing them to the Section 301 tariffs on Chinese imports that Trump imposed during his first term. Trump’s case against Chinese intellectual-property and industrial policy wasn’t without fault, but it still required an eight-month investigation and produced a nearly 200-page report on a single country. And the recommended tariffs—initially set at $50 billion to match/​offset the alleged harm from the targeted Chinese policies—came only after U.S.-China negotiations collapsed. (The tariffs then ratcheted up dramatically in response to Chinese retaliation.)

This time, USTR claims to have fully investigated 60 economies in just 82 days. Its 80-page report gave each country just a few empty paragraphs, and the agency went straight to disproportionately huge tariffs without any serious negotiations with the alleged offenders—tariffs it had promised in advance and that just so happen to mirror the regime the president has spent a year-plus trying (and failing) to keep in place.

Summing it all up.

The forced labor action is a clear abuse of the law and a serious departure from past U.S. government practice—even under President Trump. By no reasonable measure can it be considered anything other than a ham-fisted way to reinstall Trump’s tariff wall and protect it from another IEEPA-like defeat in federal court. In the latter case, the administration might be successful: Section 301 is more legally durable than the untested IEEPA and, while the forced labor action is obviously flimsy, a court might simply be unwilling to question the president’s determinations and actions. We shall see.

If the courts do rubber-stamp these tariffs, their problems will likely extend well beyond just this sham case. Section 301 could become a way for USTR to tariff any country, at any rate, and for any reason and duration, as long as it checks the law’s minor procedural boxes. The actual merits of the case, the quality of the agency’s findings, or its efforts to consider public input won’t really matter. Just say a country doesn’t adequately do something you say is harmful and then apply blanket tariffs after meaningless hearings and comments. Voila.

This is precisely the open-ended tariff power grab the courts checked with their IEEPA rulings, just with a little more procedural window-dressing. In such a case, Section 301 would be a broad tariff generator instead of the targeted tool Congress thought it designed, and it’ll surely be used by Trump or any future president who wants to tariff trading partners over carbon emissions, labor standards, AI regulation, or anything else. Republicans cheering the forced labor tariffs today should consider how they’ll feel when a Democrat holds the tariff pen.

Forced labor is a serious issue that deserves a serious policy. This ain’t it. And by dressing Trump’s tariff dreams in the language of human rights, the 301 action risks discrediting diplomatic, economic, and enforcement tools that might actually work and fueling political pushback in places that desperately need to improve. That’s a shame, and it’s surely not the last one we’ll endure before Trump’s gone. (There’s another Section 301 action—on excess capacity—reportedly coming soon.)

The only real question is, once again, whether enough people in Congress will ever care enough to do something about it.

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