Sixty economies hit as US takes aim at forced labour in global supply chains
The Australian Industry Group has condemned the United States' decision to impose a 12.5% tariff on Australian exports, calling the move unjustified and a threat to the free trade relationship between the two countries.
US Trade Representative (USTR) Jamieson Greer announced the action last week, at President Trump's direction, under Section 301 of the Trade Act of 1974. The tariffs target 60 economies for their alleged failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labour.
Economies found to have a forced labour import prohibition already in place, or that committed to one through an Agreement on Reciprocal Trade, were assigned a lower 10% rate. Australia, placed in neither category, was assigned the higher 12.5% rate alongside all other investigated economies that did not meet those conditions.
Innes Willox, Chief Executive of the Australian Industry Group, said the announcement marked a troubling shift in the bilateral trade relationship.
"The announcement today of immediate additional tariffs on Australian businesses exporting to the United States is both disappointing and meritless. Unfortunately, a tariff regime now appears to be the new normal when dealing with the United States and signals a further blow for Australian aspirations for a free and open global trading system," Willox said.
He rejected the forced labour justification outright, arguing Australia's existing legislative framework already meets and exceeds what the US is demanding.
"The justification for the imposition of a 12.5% tariff that Australia is not tough enough on forced labour ignores the reality that we already have one of the strongest legislative regimes in the world as the result of legislation introduced in 2018," he said.
Businesses are 'caught in the middle'
Willox also warned that any move by the federal government to tighten compliance requirements in response to US pressure would be counterproductive, increasing costs for Australian businesses and reducing their appetite to pursue international markets.
On the broader global picture, he argued the real problem is a lack of coordination across jurisdictions, with businesses left navigating conflicting obligations from multiple regulators.
"Economies around the globe are understandably trying to address the scourge of forced labour, but without coordination on definitions or solutions, companies are left caught in the middle, navigating inconsistent and occasionally competing cross-jurisdictional rules and reporting obligations," Willox said.
The Ai Group said it would support the government's efforts to have the tariffs overturned, arguing they run contrary to the intent and spirit of the Australia–United States Free Trade Agreement, which has been in force since 2004.
'Unjustified' tariffs
Prime Minister Anthony Albanese has said the tariffs were "unjustified" and would be raised at every level of the Australia-US relationship.
Speaking on Insiders, Albanese said Australia had strong provisions on modern slavery and was moving to strengthen them further, including by ensuring substantial fines and penalties could be applied for supply chain non-compliance.
"These are unjustified," he said during the interview. "We have very strong provisions on modern slavery."
Albanese also pushed back on the forced labour framing itself, arguing the tariffs would ultimately hurt American consumers.
"Tariffs are a penalty on consumers in the country that imposes them. This will lead to higher costs in the United States and undermine the trading relationship that we have with our US friends. And of course the US has enjoyed a trade surplus with Australia for such a long period of time, something that we will continue to point out," the prime minister added.
Australia maintains a Free Trade Agreement with the United States under which the US pays no tariffs on its exports to Australia. The Department of Foreign Affairs and Trade said Australia continues to advocate for maintaining open trade.
The USTR investigation, which began in March 2026, included two rounds of public hearings, more than 2,100 public comments, and direct engagement with the governments of more than 45 of the affected economies.
