Trump's trade war has a new target: forced labor. The case behind it is far from simple

Since the Supreme Court struck down President Donald Trump‘s sweeping global tariff plan, the White House has had its eyes set on alternative pathways for carrying out the centerpiece of Trump’s trade war agenda. Last week, one of these new pathways was unveiled, with the Office of the U.S. Trade Representative (USTR) proposing new tariffs of up to 12.5% on 59 countries and the European Union based around Section 301 of the Trade Act of 1974.

The justification: Widespread failure, the USTR claims, to restrict the importation of goods produced by forced labor.

“The failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable,” Trade Representative Jameison Greer stated in an X post announcing the tariffs. “This creates a dynamic where American workers are forced to compete globally on an unlevel playing field,” he wrote.

Forced labor is a pervasive global issue. Despite a near-universally ratified International Labour Organization (ILO) convention suppressing the practice, forced labor persists throughout global supply chains. Most recent ILO estimates indicate that 27.6 million men, women, and children are victims of the practice every day. Around 86% of the labor itself occurs in the private economy, while the remaining 14% results from state-imposed indentured servitude.

Approximately $236 billion in illegal profits is generated globally from forced labor every year, according to the ILO, stemming from frequent usage in industry, services, agricultural, and domestic work sectors. Occupations such as mining, quarrying, manufacturing, and food services generate substantial illegal profits, ranging up to $4,944 per victim.

U.S. legislation restricting forced labor practices is among the strictest in the world, dating back almost a century. Section 307 of the U.S. Tariff Act of 1930 marks an outright prohibition on imports made by forced labor. The UFLPA restricts imports from China’s Xinjiang Uyghur Autonomous Region under an encompassing “reputable presumption” of coerced labor.

Over time, domestic standards such as these have come to influence international trade policy, with the most recent North American free trade agreement, USMCA, and recent ARTs including provisions that ban importing forced labor goods. These agreements are multilateral in nature, a clear distinction from the unilateral Section 301 tariffs.

U.S. has struggled to enforce its own forced labor laws

The U.S. is a focus of forced labor concern because of the volume of goods coming into the country of questionable origin. A 2025 report from the Homeland Security Operational Analysis Center (HSOAC), which analyzed U.S. import data, found that the U.S. made up a disproportionately large share of all direct imports of at-risk goods (goods that the Bureau of International Labor Affairs believes are at an elevated risk of being produced with forced labor) globally.”In 2021, for example, the United States accounted for about 23 percent of those imports, by value, but accounted for only about 13 percent of all global imports,” it stated.

The United States has struggled to effectively enforce its own laws on forced labor goods.

Recent Congressional review of Section 307 doesn’t shy away from mentioning the challenges with enforcing the statute, including “fraud in the import process, the expansion of direct-to-consumer e-commerce, and limited access to technologies that enhance supply chain traceability.”

Congressman Dan Bishop noted in a 2023 Congressional hearing on federal UFLPA enforcement that, more than a year after the law took effect, goods made with forced labor in Xinjiang were still entering the U.S.”[Customs and Border Protection] conducted isotopic testing on clothing samples, and found that 15 percent of the items tested positive for cotton from Xinjiang,” Bishop said at the hearing.

Customs and Border Protection has made extensive efforts to mitigate the entry of forced labor goods into the U.S. A CNBC report from 2023 on supply chain activity found that CBP had detained $961 million worth of goods at the Port of New York and New Jersey within the span of less than a year. The agency, according to Assistant Port Director Edward Fox, targeted at-risk goods with a handful of internal mechanisms, including relying on national intelligence information and “expert cargo targeting systems.”

Importers whose goods come under CBP scrutiny must produce conclusive evidence that the goods in question were produced without the use of forced labor, typically within 30 days of detention. However, this is not a simple process, and millions of dollars’ worth of cargo can be held at a single time by CBP upon detention, disrupting the consistency of product supply and the scale of profitability. Paired with compounding storage and legal fees, companies often find themselves under immense fiscal pressure when trying to prove fair labor practices throughout their sourcing.

Due to globalized production, it can be difficult to trace labor across a supply chain. A major garment or automotive manufacturer, for example, may source the materials for their product from several independently operating intermediaries.

“Intermediaries can sell goods to big buyers at the same rate as if they were carrying out fair labor practices” said Desirée LeClerq, an assistant professor at the University of Georgia School of Law with expertise in international trade and labor law who has been at the forefront of researching Section 301 and its effects.

LeClerq noted that a large part of illegal profits attached to using forced labor in production come from the intermediaries. “The difference between production costs and the selling price is then taken in by the intermediary as profit.”

This is not the only way illegal profits are derived from forced labor, LeClerq noted, but it is one that both perpetuates forced labor practices and obfuscates its existence.

Brandon Daniels, CEO of Exiger, which provides supply chain and third-party risk management, and regulatory compliance solutions to over 150 Fortune 500 companies and 60-plus government agencies, including the U.S. Department of Defense and U.S. Customs and Border Protection, told CNBC earlier this year that many companies now go to suppliers directly and use their buying power to draw up contracts that specify where materials can be made. “But this is just scratching the service on how to monitor forced labor,” he said.

Chinese companies, he alleges, have used forced labor during the trade war to drive cheap products into secondary nations with favorable tariff rates, and then reroute those goods into the United States or into other markets. “It’s financial abuse,” Daniels told CNBC.

Legal challenges are likely

Legal experts say the unilateral imposition of tariffs against 60 economies at once is unprecedented. Past applications of Section 301 have been been more nuanced, and used on a case-specific basis to target distinct areas of concern in international trade policy. But Trump has increased use of the trade law measure since he first became president. Before 2017, Section 301 was largely used as leverage for the U.S. in international trade disputes. Trump opened six investigations in his first term, whereas President Biden launched just three, two of which he began during his last month in office.

The timeline of this USTR investigation also has come under scrutiny. Section 301 investigations are typically given a 12-month window after their initiation in which final reports should be produced. This round of investigations, broad in scope, produced findings on all 60 economies in less than three months.

The timeline is not the only part of the investigation that has raised eyebrows. Legal experts also pointed to the fact that the U.S. allegations are being made in spite of the difficulties the U.S. has itself faced in fighting forced labor.

“I actually kind of felt bad for USTR, because in order to show a Section 301 violation, it had to argue two things,” said LeClerq, who laid out her issues with the USTR tariffs in a post for the International Economic Law and Policy Blog last week. “First, it had to argue that forced labor goods are still making it into the United States, because if it can’t say that, then it can’t say that our producers are [being] harmed. [Next,] it had to argue that CBP is doing a very effective job, in order to show that it’s the lack of effectiveness in other countries that places the United States at a disadvantage.”

Ryan Last, associate, and Daniel N. Anziska, partner, at Troutman Pepper Locke wrote in an analysis last week that the administration’s initiation of Section 301 investigations, “represents a deliberate effort to establish a durable, legally defensible foundation for broad-based tariffs that does not depend on emergency powers or congressional reauthorization.”

USTR will inevitably look to fall back on the language of the statute itself, which explicitly authorizes the agency to use tariffs as a retaliatory measure against forced labor practices.

But while Section 301-based tariffs hold more of a substantive legal basis than those issued under IEEPA, the way in which they were brought forth could complicate their validity.

“The novel legal theories underlying this Section 301 action — particularly the assertion that the mere absence of a foreign import prohibition constitutes an ‘unreasonable’ practice — will likely face judicial challenge,” they wrote.

“Guaranteed,” LeClerq said, when asked if these Section 301 tariffs could end up in court in the near future.