| World goods exports | $22.290 trillion |
| U.S. goods imports | $2.849 trillion |
| Illegal profit from industrial and agricultural forced labor* | $40 billion |
| US imports blocked by CBP for suspected forced labor content | <$1 billion |
* International Labour Organization estimates, 2024. “Industry” includes manufacturing, mining, construction, and utilities.
** CBP statistics.
The Treasury Secretary, Scott Bessent, explains the Trump administration’s plan to replace its 2025 International Emergency Economic Powers Act (IEEPA) tariff decrees with new ones using different laws:
“Six Justices … ruled that IEEPA authorities cannot be used to raise even one dollar of revenue. 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. Treasury’s estimates show that the use of Section 122 authority, combined with potentially enhanced Section 232 and Section 301 tariffs, will result in virtually unchanged tariff revenue in 2026.”
Six weeks later, Bessent’s neighbors at the U.S. Representative Office have now duly launched two “Section 301” cases. The first, on “Structural Excess Capacity,” says manufacturing industries in 16 trading partners are too big. (Our view in short: it’s neither economically nor legally serious, and has an inappropriate acronym.) The second charges that the top 60 U.S. trading partners — from the European Union to the Bahamas — are hurting America’s economy by failing to sufficiently combat trade in goods produced by forced labor. This one also seems legally shaky, but at least identifies a real phenomenon and moral challenge. Some observations:
U.S. law has barred imports of goods made by prisoners since the “McKinley Tariff” of 1890. (Though at least one U.S. prison routinely exports goods made by inmates; see below.) The 1930 Tariff Act (“Smoot-Hawley”) then banned imports of goods made with forced labor, unless buyers could show there was no available U.S. substitute. Most recently, an Obama-era law passed in 2016 banned any imports of goods with a “reasonable suspicion” of forced labor content. In sum, for the past decade the U.S. has banned all forced labor imports.
“Section 301,” a trade law dating to 1974, allows U.S. administrations to identify “an act, policy, or practice” of a foreign government which is in some way “unreasonable or discriminatory and burdens or restricts U.S. commerce,” and gives them a right to use tariffs as a negotiating tool to fix the problem. USTR’s argument for using it here runs as follows: (a) many foreign countries lack a law banning imports of goods made with forced labor like America’s, so (b) they may be incorporating forced labor goods as inputs to their manufacturing industries, which (c) might allow them to produce goods more cheaply than similar American stuff, and therefore (d) this would justify a U.S. tariff to offset this supposed advantage.
1. Law: As a legal matter, then, their argument is that the absence of a particular policy — a law similar to America’s — is the same as actually having the requisite unreasonable policy. This sounds like a stretch, but courts will decide.
2. Economics: USTR’s Federal Register Notice announcing the investigation doesn’t offer evidence that countries on its list are buying any forced labor goods, but says that “none of these countries has adopted and effectively enforced a forced labor import prohibition to date,” and this “may negatively affect U.S. commerce.” How much, then, can we really know? Reliable facts on forced labor are scarce — as is typical of criminal enterprises — but international research and U.S. data both suggest that the scale of forced-labor trade is probably small.
* International evidence: International Labour Organization reports in 2022 and 2024 (which USTR uses as points of reference for its “301” investigation), say that 27.6 million of the world’s 3.22 billion workers were in various forms of forced labor as of 2021 — most commonly, people trapped in jobs when executives withhold pay or confiscate passports. This includes 8.4 million in “industry” (by which the ILO means manufacturing, mining, utilities, and construction), out of an 800-million worldwide total, and 2.1 million of 916 million farm and agriculture workers. They say forced labor is “highest in severity and scale” in “informal micro- and small enterprises operating at the lower links of supply chains in high-risk sectors and locations,” and that with respect to trade destined for wealthier countries, forced labor is likely most common in “raw materials production in the lower tiers of supply chains of consumer goods.”
“Illegal profits” from forced labor, the ILO researchers believe, totaled $236 billion in 2021. About three-quarters of this – $172 billion – came from sex trafficking. Forced-labor profits “industry” totaled $35 billion, and from agriculture $5 billion. The ILO doesn’t speculate on how much of the combined $40 billion came from purely domestic sales and construction contracts, and how much from exports of goods. But in an extreme case, if all of the $40 billion came from goods exports, about 0.2% of the world’s $22.3 trillion in 2021 goods exports would contain some forced labor content. As to effects on trade flows, if forced-labor businesses sold at market prices and pocketed the full $40 billion in profits at the expense of exploited workers, there wouldn’t be a price effect or a “burden on commerce,” but it seems likely that they would sell somewhat cheaper, losing some profit but gaining illicit market share.
* American data: Since passage of the 2016 law, CBP has imposed 55 “Work Release Orders” to block imports of goods worth $3.08 billion, or about $400 million a year. Seizures under a second law, the Uyghur Forced Labor Prevention Act, were about the same. Annual U.S. goods imports during this time averaged a bit above $3 trillion, so the combined $0.8 billion in seizures would be about 0.03% of U.S. import value. Meanwhile, as former U.S. trade/labor negotiator Desiree LeClercq notes, neither the 1930 nor the 2016 law actually bans export of U.S.-made goods produced with forced labor. DHS reporting, for example, shows that 5% of forced labor prosecutions in the United States show up in agriculture, and an unstated but non-zero number in manufacturing, so some U.S. exports to other countries may also contain forced-labor content.
In sum, international research and U.S. data do suggest that some products flowing between countries are made by coerced workers. But the total is likely small relative to trade flows or U.S. industry — and to the $166 billion IEEPA tariffs Bessent wants to restore. And again, the USTR hasn’t provided evidence that countries on its 60-partner list are knowing (or even unwitting) buyers. Nor for that matter is the U.S. law necessarily the world’s best: LeClercq argues that the European Union’s forced labor policy, set to enter into force next year, is better than America’s, since its program does ban exports of European goods made with forced labor, and has stronger due process rules on import cases.
3. Conclusion: International trade isn’t the core forced labor problem, and forced labor likely has only a modest influence on trade flows. But a systematic program to reduce the amount of forced labor worldwide — including keeping forced-labor goods out of the U.S. and forced-labor U.S. goods out of world markets, as will as improving laws and compliance elsewhere — would be admirable regardless of the problem’s scale. And if the administration wants ideas for such a program, it needn’t look far: the Biden administration actually ran one, combining USAID and Labor Department project support with CBP enforcement programs, diplomacy, and trade negotiations.
Bessent’s comments, though, indicate that the Trump administration simply plans to use forced labor as a pretext to recreate the IEEPA tariffs, just as its first IEEPA decrees in 2025 used fentanyl deaths as a pretext for tariffs on Canadian and Mexican goods. This isn’t admirable. And if courts take Bessent at his word, they may conclude that the investigation is an illegal use of Section 301, meant not to address a “burden on U.S. commerce” but to bypass Congress and create a new tariff system by decree. As we’ve said before, the Constitution gives Congress, not presidents, the power to set tax rates, including tariffs. If the administration wants a higher tariff rate, it should simply follow the Constitution and ask Congress to pass a bill.
PPI’s four principles for response to tariffs and economic isolationism:
Treasury Secretary Bessent (Feb. 20) says 301 cases will replace “IEEPA” tariffs.
U.S. Trade Representative’s March Federal Register Notice announcing “Section 301” investigation of forced labor laws.
And the “Section 301” text.
Compare & contrast:
The Biden administration reviews its four-year program against forced labor and human trafficking.
International research and data:
The International Labour Organization studies the scale of forced labor as of 2021.
… and the profits drawn from it.
U.S. data and policy:
CBP’s reports on Work Release Orders since 2017.
… similar data on Uyghur Forced Labor Prevention Act seizures.
And LeClercq’s critique of U.S. law notes a lack of due process and spotty enforcement. Her close:
“Like its other Section 301 investigations, USTR is inviting public comments before making its determination. I hope the CBP’s lax evidentiary standards, weak procedures, and questionable commitment to enforcement, along with U.S. forced labor practices, come to light. The U.S. administration must fully reckon with these deficiencies before imposing U.S. models on the world.”
And two U.S. stories:
An Atlanta Journal-Constitution report (2022) on an agricultural forced labor case involving onion and blueberry farming in Georgia. It’s not clear whether the produce was for strictly domestic sale or involved exports as well.
And in regard to prison labor: Eastern Oregon Correctional Institution inmates make denim jeans and shirts — “Prison Blues” — and market them in Europe and Asia via distributors in Japan, Germany, and the Netherlands. PPI editorial note: This isn’t necessarily bad — voluntary, paid, and regulated prison work can help inmates develop work habits that ease reintegration to society — but an embarrassing contrast to U.S. import policy.
