USTR Announces Findings and Calls for Comments in Section 301 Forced Labor Investigation

On June 2, 2026, the Office of the United States Trade Representative (“USTR”) announced the results of investigations under Section 301 of the Trade Act of 1974 (“Section 301”) concerning 60 trading partners’ alleged failure to impose and/or effectively enforce prohibitions on the importation of goods produced with forced labor. Announcing its findings that all 60 of the economies investigated had failed to adopt and/or effectively enforce such import prohibitions, USTR determined that this conduct is unreasonable and burdens or restricts U.S. commerce, and is therefore actionable under Section 301. USTR thus has proposed imposing tariffs ranging from 10 percent to 12.5 percent on imports from these countries. Public comments on these proposed tariffs will be accepted until July 6.

As discussed in our prior alert, following a decision by the Supreme Court that President Trump lacked authority to impose tariffs under the International Emergency Economic Powers Act (“IEEPA”), the Trump Administration replaced IEEPA tariffs in February 2026 with temporary tariffs imposed under Section 122 of the Trade Act of 1974, which are scheduled to expire on July 24, 2026. At the same time, the Trump Administration announced plans to initiate, on an expedited basis, trade actions under other statutory authorities that allow longer term tariffs, including Section 301. Shortly thereafter, on March 12th, USTR announced the initiation of Section 301 investigations on 16 countries relating to structural excess capacity and production in manufacturing sectors. The next day, on March 13th, USTR initiated Section 301 investigations on 60 economies for their alleged failure to impose and effectively enforce import bans on goods produced with forced labor.

While the results of the excess capacity investigation remain pending, USTR announced on June 2 that all 60 economies subject to the investigation of forced labor import prohibitions had failed to impose and/or effectively enforce such measures. In the Federal Register notice laying out its determination, USTR proposed imposing tariffs on all 60 economies, which account for over 90% of imports into the United States. For 46 countries,[1] USTR determined that no prohibition of imports made with forced labor had been imposed and proposed a 12.5% tariff rate.

For the remaining 14 economies, USTR determined that import prohibitions existed but were not effectively enforced and proposed a lower 10% tariff rate. Those economies include:

• Canada, the European Union, Mexico, and Pakistan, which USTR determined impose forced labor import prohibitions, but fail to effectively enforce them;
• Argentina, Bangladesh, Cambodia, El Salvador, Guatemala, Malaysia, and Taiwan, which USTR determined have undertaken commitments in their respective Agreements on Reciprocal Trade (“ARTs”) with the United States regarding forced labor import prohibitions;
• Ecuador and Indonesia, which USTR determined both impose a forced labor import prohibition and have undertaken related commitments in ARTs; and
• The United Kingdom, which USTR determined imposes a partial regime with the effect of preventing the importation of certain forced labor goods.

Prior to finalizing these proposed tariffs, USTR has requested public comments on possible adjustments to the proposed rates (see below).

II. Exceptions to Proposed Tariffs and Consideration of Other Tariff Mechanisms:

The tariff rates USTR has proposed would apply to all imports from these countries except those identified in Annex A of the notice. These exemptions from the tariffs—which may also be modified or adjusted as a result of comments submitted to USTR—cover a list of individual product categories that mirror the product exemptions from Section 122 tariffs listed in Annex II of Presidential Proclamation 11012. Other exemptions from the Section 301 tariffs would include: (i) products subject to sector-specific duties imposed under Section 232 of the Trade Expansion Act of 1962 (“Section 232”); (ii) USMCA-compliant goods; (iii) textiles and apparel articles that enter duty-free under CAFTA-DR; and (iv) informational materials, donations, and accompanied baggage.

While these proposed exemptions would explicitly prevent the new Section 301 tariffs from applying cumulatively (or “stacking”) with the various Section 232 tariffs, USTR has not proposed any similar exemption or de-stacking provision with respect to other tariffs. Accordingly, it remains possible that these new Section 301 tariffs may stack with other Section 301 tariffs, such as those already imposed on many Chinese products, as well as future Section 301 tariffs that may result from the pending excess capacity investigation.

Additionally, USTR has proposed a special mechanism allowing a certain volume of apparel and textile imports from certain economies to enter at a reduced Section 301 tariff rate, tied to volumes of U.S. textile exports to those partners, and is seeking comments on that new mechanism as well as on whether similar mechanisms should be established for other sectors.

III. Accelerated Request for Public Comment

Consistent with USTR’s stated intent to conduct this and other Section 301 proceedings on an “accelerated timeframe,” the deadline for public comments is fast approaching. Hearing requests and summaries of testimony are due by June 22, 2026, while written comments are due by July 6, 2026. USTR will hold a public hearing on the proposed tariffs on July 7, 2026, but unlike in prior Section 301 proceedings, USTR has not indicated that it will accept post-hearing rebuttal comments. If you are interested in participating in this process, Covington can assist in the preparation and transmission of these comments.

USTR has specifically invited comments on:

• The particular products to be subject to increased tariffs, including whether particular products should be excluded from the action, or whether products currently listed in Annex A of the notice should be added to its scope;
• The level of the proposed tariff rates;
• Whether different tariff rates should apply depending on whether a trading partner has (i) made a commitment to impose and enforce a forced labor import prohibition, (ii) has imposed a forced labor import prohibition, or (iii) has imposed a partial regime with the effect of preventing the importation of certain forced labor goods; and
• Other proposed remedies, including special tariff treatment for certain textile imports, and whether similar mechanisms should be established for other sectors.

Importers and purchasers affected by the proposed Section 301 tariffs on U.S. imports may want to consider submitting comments by July 6. The comment process provides an opportunity for stakeholders to identify for USTR the potential impact of the proposed tariffs, as well as to recommend specific tariff rates and how these duties should (or should not) stack with other tariffs.

The comment process also provides stakeholders an opportunity to suggest that USTR create or eliminate carveouts for particular products, including as a result of sourcing options and other supply chain considerations.

Finally, stakeholders may wish to consider the anticipated global impact of USTR’s investigation and resulting tariffs on U.S. trade flows, including U.S. exports. Given the 2.5% difference in tariff rates between countries with forced labor import prohibitions and those without, it is not clear how effectively this outcome will incentivize additional countries to adopt or strengthen such prohibitions, or take pursue enforcement actions under such further frameworks. Nevertheless, some countries have already announced an intent to implement or enforce forced labor-related measures since the launch of USTR’s investigation in March, and should any additional countries do so, U.S. exporters and importers alike may increasingly find themselves subject to new compliance obligations and enforcement risks.