Asia disputes forced labour claims used to justify latest US tariffs

SINGAPORE - Asia’s major economies pushed back against allegations of forced labour, used by the United States on July 24 to impose yet another round of tariffs and seen by many as a pretext by Washington to maintain a “tariff wall” on its trading partners.

Those affected – many of which are now saddled with a slightly higher rate of 12.5 per cent as compared to a flat rate of 10 per cent – said the claims of forced labour are unfounded.

Japan’s Chief Cabinet Secretary Minoru Kihara called the tariffs “regrettable” while asserting that the country’s industries and trade practices “comply with international rules”.

Australia’s Trade Minister Don Farrell said the tariffs were “unjustified”, and called for them to be removed.

“Australia’s measures to combat forced labour and modern slavery are among the strongest in the world, and we are recognised globally, including in the US, for our leadership,” he told Australian media.

Ajay Srivastava, founder of the Global Trade Research Initiative, a Delhi-based research group, told The Straits Times that the latest US tariff “lacks a credible factual basis”.

“The United States has not produced evidence that India imports goods made with forced labour,” he said.

“The tariff, therefore, appears to serve primarily as a mechanism to preserve the Trump administration’s tariff wall … rather than as a targeted response to a proven forced-labour problem involving India.”

Coming into effect on July 24, the 10 per cent to 12.5 per cent tariffs are imposed on 60 US trading partners who have allegedly used forced labour in their supply chains.

In February, after US President Donald Trump’s April 2025 “reciprocal” tariffs were struck down by the Supreme Court, he imposed a 10-per-cent tariff on imports which lasted 150 days and were due to expire on July 24.

In the meantime, the US began investigations using Section 301 of the Trade Act of 1974, which addresses unfair foreign practices affecting US commerce.

The results of the probe were announced in June, and after about a month the tariffs kicked in, just as the 150-day temporary duties expired.

The US trade department said these were determined after months of investigation into forced labour in these countries’ supply chains.

A 10-per-cent rate will be placed on countries that have taken some action to prevent the import of forced labour goods, and these include Bangladesh, Cambodia, India, Indonesia, Malaysia, Mexico, Pakistan, Sri Lanka and the United Kingdom.

The higher 12.5-per-cent rate will apply to most other US trading partners, including China, Japan and South Korea.

Imports such as fuel, foods and fertilizers will be exempt, as well as products such as automobiles, metals and drugs that are covered by separate levies.

Economies with existing trade agreements with the US, such as the EU, Taiwan, Japan, South Korea and Switzerland, will get exemptions from the new tariffs in line with existing deals.

Japan’s Kihara emphasised that the US and Japan are committed to their trade pact from 2025.

“We share the understanding with the US that last year’s agreement remains unchanged, and that both sides are committed to its implementation. We have also confirmed with the US that, ultimately, no additional tariffs exceeding the terms of last year’s agreement will be imposed on Japan,” he said.

The agreement reached in July 2025 set the US’ “reciprocal tariff” on Japanese goods at 15 per cent in exchange for a US$550 billion (S$710 billion) Japanese investment package. This means that with the new rate of 12.5 per cent, Japan faces a slightly lower tariff rate than that of the 2025 trade pact.

Similarly, the South Korean government said the US is still committed to a Seoul-Washington tariff agreement reached in 2025 that set tariffs on South Korean goods at 15 per cent.

“We have requested that the US side comply with the Korea-US trade agreement,” the Yonhap news agency reported the Ministry of Trade, Industry and Resources as saying.

“The US side also reaffirmed its position that the existing trade agreement must be upheld.”

The EU said the new levies were “in line with the US tariff commitments agreed under the EU-US Joint Statement”.

With numerous rounds of tariffs being imposed and rescinded since Trump took office, many countries appeared unfazed.

Poj Aramwattananon, Chairman of the Thai Chamber of Commerce and the Federation of Thai Chambers of Commerce, said that the Thai business sector is closely monitoring the situation. Thailand receives a tariff rate of 12.5 per cent, similar to most competing countries.

“Countries with slightly lower tariff rates than Thailand, such as 10 per cent, may have a slight advantage, but the difference isn’t as wide as in previous measures. Therefore, it’s not yet a significant concern that would significantly impact the competitiveness of Thai businesses,” Poj said.

The reaction from China was also muted, with analysts saying that the tariffs are expected.

The new “forced labour” tariff rate for China is 12.5 per cent, a marginal increase over the expiring 10 per cent. This is on top of other sectoral tariffs on Chinese goods, such as electric vehicles, steel and semiconductors. This puts China’s new effective tariff rate at 23.4 per cent, a step up from 21.3 per cent in the last four months, according to a report by financial services firm Moody’s.

Stephen Olson, visiting senior fellow with the ISEAS – Yusof Ishak Institute in Singapore, told ST: “The rate increase is marginal and this move by the US has been foreseeable for months.”

He added: “It’s difficult to say if Beijing will feel compelled to retaliate, given the increase was so small. If there is a response, I would expect it to be measured and proportional. Both sides would like to give the so-called Board of Trade a chance to work, so there’s little chance this latest action will completely upend what Trump and Xi agreed to in May.”

The Board of Trade, a bilateral government mechanism to manage bilateral trade, was a key outcome of the May 2026 summit between Trump and Chinese President Xi Jinping in Beijing.

Recent high-level bilateral meetings signalled that both sides were working towards the next leaders’ summit in September, when Xi is expected to visit the US.

Marx Wu, whose Hunan-based firm sells fireworks to the US, said the latest tariff adjustment is likely to have “almost no impact” on their products.

“Our buyers still have to buy them even with the higher tariffs. This year’s 250th anniversary celebrations in the US consumed more fireworks than in previous years, and many customers’ inventories have decreased or even reached rock bottom, which has increased their willingness to purchase products for the next sales season,” he told ST.

At a regular press briefing on July 24, China’s foreign ministry spokesman Lin Jian said that China’s stand has been consistent – the country is opposed to all unilaterally imposed tariffs.

“Tariff wars and trade wars do not benefit any party,” he said.

The Trump administration would disagree as it continues investigating 16 countries for “excess capacity” or the overproduction of certain goods, which is likely to trigger another round of tariffs.

This comes on the heels of other recent tariffs, with Trump ordering a 50-per-cent tariff on many Canadian products, including wine, hockey sticks and cement, and a 25-per-cent duty on certain goods from Brazil.

• Additional reporting by Debarshi Dasgupta in New Delhi, Michelle Ng and Lim Minzhang in Beijing, Walter Sim in Tokyo, May Wong in Bangkok