Forced-Labor Tariffs on 60 Economies Land This Week, Greer Says

USTR will publish final Section 301 determinations within days on roughly 60 economies accused of failing to block imports made with forced labor, with Mexico facing a proposed 10% additional tariff alongside the European Union, Canada, Argentina and the United Kingdom, and 46 other economies facing 12.5%. The measures are timed to replace the Section 122 surcharge expiring July 24, after the Supreme Court voided tariffs imposed under emergency powers. Roughly 85% of Mexican exports qualify for USMCA exemption, leaving non-compliant manufacturers, agricultural shippers and cross-border suppliers exposed atop an existing US duty bill near US$23 billion.

Mexico is days away from learning whether it will carry a new US tariff layer tied to forced labor enforcement. US Trade Representative Jamieson Greer told CNBC that Washington will publish final determinations covering roughly 60 economies within days, closing an investigation that has named Mexico alongside the European Union, Canada and the United Kingdom.

The timing is not incidental. The measures are built to slot into the gap left by the temporary 10% surcharge imposed under Section 122 of the Trade Act of 1974, which lapses on July 24. That surcharge was itself an improvised replacement after the US Supreme Court ruled on Feb. 20 that emergency powers legislation gave the president no authority to set tariffs, wiping out the levy structure the administration had assembled the previous year.

What Mexico Stands to Pay

Under the proposal published on June 2, goods from Mexico would carry an extra 10%. The same rate was assigned to 13 other economies, among them the European Union, Canada, Argentina and the United Kingdom. The remaining 46 economies under review face 12.5%. Nothing takes effect on publication: a 45-day consultation window governs the process, and Mexico has argued throughout that the rate should be revised through bilateral channels.

The practical exposure is narrower than the headline rate suggests. The Ministry of Economy has calculated that close to 85% of Mexican shipments to the US qualify under treaty origin rules and would be shielded, leaving the non-compliant remainder, roughly one in seven export dollars, squarely in range. Automobiles, steel and aluminum fall outside the investigation altogether, though for an uncomfortable reason: Section 232 orders already tax them at rates reaching 50%.

Exporters are absorbing that on top of an existing burden. Mexican goods entering the US currently generate close to US$23 billion in annual duties, a figure that frames why the Ministry of Economy has treated a 10-point addition as worth contesting line by line.

The Legal Grounds

Greer's argument rests on enforcement rather than on conditions inside Mexican workplaces. His position, as he put it to CNBC, is that most countries have no statute barring trade in goods made with coerced labor, and that those with such a statute do not apply it. USTR's finding is that all 60 economies investigated failed either to legislate a prohibition or to enforce one, allowing third-country goods produced under coercion to move through their supply chains and into the US market.

Six economies, Canada, Ecuador, the European Union, Indonesia, Mexico and Pakistan, were placed in the category of having a prohibition on the books without effective application, which is what earns them the lower 10% rate rather than 12.5%.

Section 301 of the Trade Act of 1974 provides the statutory footing, and that choice matters. The provision survived February's Supreme Court ruling untouched, having been the vehicle for US duties on Chinese goods since 2018. Analysts have flagged the pattern: Mexico has been named in three separate Section 301 proceedings in under three months, an instrument historically reserved for Beijing rather than for treaty partners.

Mexico made its case at hearings on July 7, appearing alongside Peru, Guatemala and Ecuador to request exclusion, with Economy Minister Marcelo Ebrard leading the delegation. Government officials have said they expect the treatment ultimately applied to differ from what was proposed.

Ottawa Absorbs a Harder Blow

Canada's week has been considerably worse. Trump applied 50% duties on July 20 to wine, hockey sticks, cement and a wide list of other Canadian products, accusing Ottawa of discriminating against US automobiles, alcohol and dairy. The measures are set to bite 30 days out, and, unlike most previous rounds, reach goods that comply with the treaty, which weakens the assumption in Mexico City that origin compliance functions as a reliable shield.

Prime Minister Mark Carney responded by announcing a call with Trump and an agreement to compress the timeline on trilateral negotiations. Speaking in Ottawa, he said the two had committed to deepening and accelerating discussions over the coming weeks.

The exchange lands as US and Mexican negotiators hold their third round in Mexico City, the first formal sessions since Washington declined the automatic renewal on July 1 and triggered a decade of annual reviews. President Claudia Sheinbaum has been pressing the case at the leader level, and the federal government is coordinating positions with the Business Coordinating Council ahead of Greer's visit.

Generics Get a Clock

Separately, Trump set out a schedule for generic pharmaceuticals. Imports stay duty-free from Aug. 1 for two years; a 100% rate applies after that for twelve months, then 200%. The announcement, made on social media, was framed as a deadline for manufacturers to relocate production to US soil, and follows the 100% duty applied to patented and branded medicines earlier in the administration. Treatment of branded products is unchanged.