| Likely annual cost to Americans of Trump admin “301” forced labor tariffs | ~$100 billion* |
| Annual value of U.S. imports blocked by CBP on forced labor suspicion | <$1 billion |
Assuming 10% and 12.5% tariffs on goods imports, extrapolating from 2025 tariff collection under 10% “IEEPA” tariffs.
** CBP statistics; annual totals vary but average $0.8 billion over the last 8 years.
Metaphorically shaking his fist at the Supreme Court this past February, Treasury Secretary Scott Bessent says the administration will replace its illegal “International Emergency Economic Powers Act” (“IEEPA”) tariff decrees with new ones using different laws:
“This administration will invoke alternative legal authorities to replace the IEEPA tariffs. We will be leveraging Section 232 [a “national security” law run by the Commerce Department] and Section 301 [see below] tariff authorities that have been validated through thousands of legal challenges.”
One such decree, a 98-page “Section 301” report published by the U.S. Trade Representative Office, showed up two weeks ago. It announced tariffs of 10% and 12.5% on 60 trading partners — Colombia and Korea, the UK and the European Union, Jordan and South Africa, the Bahamas and New Zealand — beginning late July, on the basis of a claim that they don’t do as much as the U.S. to stop trade in goods made using forced labor. Together, they provide about 97% of all U.S. imports, from crude oil and semiconductors to clothes, winter vegetables, flat-screen TVs, hand tools, fertilizer, and dinner plates. Should the decree go into effect, taking its various exceptions (energy, USMCA goods, etc.) into account, it would likely cost American families, farmers, manufacturers, retailers, restaurants, building contractors, and other goods-buyers about $100 billion a year — more than 100 times the $0.8 billion average annual value of goods CBP blocks at U.S. borders on forced-labor suspicion.
As to its legal prospects, Mr. Bessent is correct that some past “Section 301” tariffs were challenged and survived. But no two “301” actions are alike, and the fact that courts allowed earlier ones doesn’t mean they’ll accept this one. Let’s look:
“Section 301,” a trade law dating to 1974, allows the U.S. government to identify “an act, policy, or practice” of a foreign government that in some “unreasonable” way “burdens or restricts U.S. commerce” and use tariff threats as a negotiating tool to fix it. USTR’s complex four-step argument for using it here (setting aside, for now, Bessent’s earlier statement of the administration’s real motive) is –
(i) 54 countries on its list lack a law like the U.S. ban on all imports of goods made with forced
labor. Six more (Canada, Ecuador, Indonesia, the EU, Mexico, Pakistan) do have such laws, but the report says they don’t enforce them as well as the United States does. Therefore,
(ii) manufacturers in these countries may be unwittingly incorporating forced labor goods as inputs, which
(iii) might allow them to produce goods more cheaply than similar American stuff. This, in turn,
(iv) justifies a tariff on any scale the administration wants — in this case, one vastly greater than any estimate of actual forced-labor trade flows.
If this decree is to survive legal challenge this fall, the administration must convince courts of three things:
1. The existence of unreasonable “acts, policies, or practices”: Here, the claim is that the absence of a forced-labor import ban identical to America’s (passed in 1930, updated in 2015) is the same as the presence of the unreasonable “act, policy, or practice” the “Section 301” statute requires. This seems a stretch, but some similar previous efforts — for example, investigations citing weak copyright or patent protection overseas — have held up. Set against this, as former U.S. trade/labor negotiator Desiree LeClercq observes, the investigation’s premise is that the U.S.’ forced-labor program is ideal, which isn’t necessarily so. LeClercq notes, for example, that the EU’s forced-labor law has stronger evidentiary rules than America’s and — unlike the U.S. — not only bans imports from other countries but also exports of goods containing forced labor inputs from Europe. And from a beyond-trade perspective, U.S. forced-labor policy has steadily weakened over the past 18 months, as the Trump administration’s 2025 “DOGE” program abolished most efforts to fight forced labor overseas while cutting the Labor Department’s domestic Wage and Hour Division staff from 1,435 and 974 field inspectors 2024 to a requested 1175 and 611 field investigators this year.
2. The existence of a “burden on commerce”. Should the court accept the first argument, the administration would then need to demonstrate that the “acts, policies, or practices” impose a “burden” of some sort on U.S. commerce. USTR’s report doesn’t seem to do this at all.
First, it doesn’t show that any listed country actually buys any goods made with forced labor. Its 98 pages cite no actual, verified shipment of such goods passing customs in Sri Lanka, Italy, South Africa, Uruguay, or anywhere else. Rather, citing CBP trade-blockage figures and International Labour Organization estimates of the possible scale of forced labor output (as distinct from “trade”), it notes that some forced-labor goods do cross borders, and asserts without proof that other countries likely import more of them than does the United States.
The nadir-of-credibility point is probably its claim about the Bahamas — a small island chain off Florida, population 404,000 — whose modest shipments of goods to the U.S. will now get a 12.5% tariff. (It’s mainly fuel oil, sea crayfish, and sand for Floridian customers.) The report offers no evidence at all that the Bahamas buys any forced labor goods — and since over 80% of the things Bahamians actually do buy from abroad are American*, the stats suggest that if any were made with forced labor, they’re most likely from America itself.
| Bahamas imports | Average 2021-2025 |
| Total | $4.6 billion |
| U.S. share | 81% |
| EU share | 11% |
| All other | 8% |
* U.S. exports to the Bahamas are principally refined fuels from Texas and Louisiana, and prepared foods from Florida. IMF World Economic Outlook database for Bahamas imports by country; Commerce Department TradeStats Express for U.S. exports to Bahamas by state.
Second, it doesn’t demonstrate that even if a country on the list does unwittingly import forced-labor goods, that would impose any “burden” on U.S. business, labor, or agriculture. Earlier “301” investigations, even in the first Trump administration, tried to demonstrate such “burdens” through specific facts and economic analysis. For example, the 215-page 2017 report on Chinese forced technology transfer and industrial espionage identified policy directives, government agencies assigned to carry them out, and the buildings in which the agencies operated, and then conducted a professional modeling of economic impact, estimating about $50 billion worth of “burden” through captured intellectual property, lost exports, artificial creation of new competitors, and so on.
Nothing like that shows up here. Instead, the report simply asserts that forced-labor production naturally creates a flow of unfairly low-priced goods that displace lawful competitors. This may be true — forced-labor enterprises might want to grab market share by selling at unnaturally low prices — but it also might be wrong, as they might equally want to grab maximum profit by selling at market prices. Only empirical analysis could settle this question, and the report offers none.
In fact, the main current analysis of worldwide forced-labor profit in goods-producing industries — the ILO’s 2024 estimates of $35.4 billion in industry and $5.0 billion in agriculture, cited in the report — suggests the latter is more likely. And CBP’s annual average of $0.8 billion worth of imports a year blocked on forced labor grounds, at roughly 0.02% of the U.S.’s $3.3 trillion annual goods-import total, suggests any economic impact may be too small to measure. Absent a price advantage, forced labor remains an egregious human rights violation and an appropriate policy target, but couldn’t legally justify any “301” tariff — let alone one on a scale so much larger than the actual import blockages.
3. Compliance with Congressional intent. Finally, stepping back a bit, the administration would need to show that it is acting as Congress intended when it wrote up the “301” statute five decades ago. One of the drafters, Alan Wolff – formerly a Deputy USTR and WTO official, now a scholar at the Peterson Institute for International Economics – doubts it can, arguing that the statute doesn’t authorize multi-country investigations or general tariff increases. And per Bessent, the investigation is meant not to solve specific trade-related policy problems, but rather to serve as a pretext for replacing the Congressionally authorized U.S. Harmonized Tariff Schedule by decree with a new tariff system of the administration’s own design. As such, it is perhaps not a real “301” investigation at all, but just Mr. Trump’s third attempt to take an old trade law meant for a very specific purpose, and try to use it to nullify Congress’ constitutional authority over tariff rates.
That’s not what Congress meant these laws to do. Courts so far haven’t applauded attempts to use them that way. And whatever the courts do this time, of course, Congress has the power to protect its authority and restore Constitutionally appropriate management of tariff rates, and can use it whenever it’s ready.
PPI’s four principles for response to tariffs and economic isolationism:
Treasury Secretary Bessent (Feb. 20) says “232” and “301” decrees will replace “IEEPA” tariffs.
The U.S. Trade Representative’s June Report announcing “Section 301” tariffs ostensibly for “inadequate forced labor laws.”
The “Section 301” statute.
Alan Wolff of PIIE on the origins and applicability of “301”, arguing among other things that it doesn’t authorize multi-country investigations or general tariff increases.
And Carnegie scholar Peter Harrell takes a similar view in Reason this week.
Compare & contrast:
The Biden administration’s four-year program against forced labor and human trafficking.
Trump admin. scraps forced labor reduction programs abroad.
And the EU law on trade in forced labor products.
International research and data:
The International Labour Organization studied the scale of forced labor as of 2021.
… and the profits drawn from it.
U.S. data and policy:
CBP’s Withhold Release Orders and Findings since 2017.
… and similar data on Uyghur Forced Labor Prevention Act seizures.
And at home, DHS has stats on cases by industry type; the Department of Justice itemizes about 180 prosecutions for forced labor and peonage each year; and the Labor Department proposes cuts to its investigation force.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
