New U.S. tariff proposal takes aim at forced labor goods from 60 countries

The U.S. is moving to impose new tariffs on dozens of trading partners, including Canada, over failures to ban or enforce restrictions on forced labor in supply chains, with direct implications for American employers and importers.

The Office of the U.S. Trade Representative (USTR) has proposed additional duties on imports from 60 economies after determining all have failed to impose or enforce bans on forced labor goods. Canada is among a small group of jurisdictions, alongside the European Union and Mexico, identified as having legal prohibitions on paper but failing to enforce them effectively.

In response, Canadian Prime Minister Mark Carney has pledged new legislation to strengthen Canada's framework, telling reporters in Ottawa that his government does not want "any element of forced labor coming in goods and services."

U.S. proposes tiered tariff regime

The Office of the U.S. Trade Representative (USTR) has proposed additional duties on imports from 60 economies after determining all have failed to impose or enforce bans on forced labor goods.

The agency concluded the gaps distort market conditions and disadvantage companies that comply with labor standards.

Under the plan, economies that have implemented or committed to enforcing prohibitions through Agreements on Reciprocal Trade would face a 10% tariff. Those without such measures would face a higher 12.5% duty. A separate textile mechanism would allow limited volumes of apparel imports at reduced tariff rates, reflecting supply chain complexities in that sector.

Public consultations are underway, with written submissions due by July 6, 2026, and hearings scheduled for July 7.

Canada cited despite CUSMA commitments

Canada is among a small group of jurisdictions — along with the European Union and Mexico — identified as having legal prohibitions on forced labor imports but failing to enforce them effectively.

The USTR report points to commitments under the Canada–U.S.–Mexico Agreement (CUSMA) as evidence of progress, stating that such frameworks “reflect the increasing awareness of this issue.”

However, it adds: “each of our trading partners must do more to ensure that trade does not perversely encourage and entrench forced labor globally.”

Labor market pressures add urgency

The tariff proposal lands amid ongoing strain in Canada's labor market, amplifying concerns for U.S. employers and importers with exposure to trade-sensitive industries.

Canada's private sector shed about 112,000 jobs in the first four months of 2026, with an additional 8,700 public sector roles lost, according to Statistics Canada. Job losses have been concentrated in export-oriented industries such as mining, primary metals and forestry. Forestry and logging employment, for example, declined four per cent year-to-date through 2025, continuing a multi-year downward trend.

The Bank of Canada has described current conditions as "low hire, low fire," with persistently weak hiring limiting workforce renewal and mobility.

Trade uncertainty deepens for North American supply chains

The proposed tariffs add to broader uncertainty as Canada navigates ongoing CUSMA review discussions and sector-specific trade negotiations.

Canada has formally called for a 16-year renewal of CUSMA, as trade uncertainty continues to drive workforce instability across the country. Canadian officials have signaled openness to proposals that support long-term North American competitiveness, while also engaging in talks covering steel, aluminum, automobiles and forestry — sectors most exposed to tariff changes. Prime Minister Carney said June 2 that the U.S. has identified roughly 30 technical issues with Canada, as Ottawa explores ways to reduce tariff impacts.

Meanwhile, the U.S. has already adjusted some trade measures, lowering tariffs on certain steel and aluminum products from 25% to 15%, with further reductions possible under domestic sourcing thresholds.

The United States and Mexico have also begun formal discussions, indicating potential for broader realignment of trade rules.

Growing implications for employers

USTR's findings reinforce the connection between labor practices and trade competitiveness, with direct implications for American businesses sourcing goods across borders.

The agency said failure to restrict forced labor imports allows some firms to produce goods at lower cost, "thereby distort[ing] market conditions" and disadvantaging compliant businesses.

Here are the tariffs the U.S. has imposed on other countries that are in place today, according to the report titled US Reciprocal Tariffs by Country: Complete 2026 by HS Rates

Canada's response to the U.S. tariffs has run along several tracks at once: retaliatory counter-tariffs (most later rolled back), financial and remission relief for business, a large workforce/labour-market support effort, and an ongoing negotiation posture. Here's the data organized by track.