US Forced Labor Tariff Probes Draw Mixed Industry Response

The Trump administration's Section 301 investigations, targeting more than 80 economies over forced labor enforcement failures and 15 over excess manufacturing capacity, pose a direct risk to Mexico's export-oriented industries, particularly automotive, where Mexican-assembled vehicles already face a 25% tariff against Japan's 15% rate. Mexico's leading business organizations, including CCE, CONCAMIN, and INDEX, have formally requested exclusion from the probe, arguing no evidence of overproduction exists and that an adverse finding could impose permanent, sector-specific tariffs that undermine USMCA duty-free protections and destabilize deeply integrated North American supply chains.

The Trump administration has opened hearings on a new set of tariffs tied to forced labor enforcement, targeting more than 80 economies it says fail to adequately prohibit imports produced under coercive labor conditions,  a move that has drawn a divided response from US and international businesses.

The investigations proceed under Section 301 of the Trade Act of 1974, which grants the executive branch authority to respond to foreign trade practices through tariffs. The trade probe covers 59 economies plus the European Union on forced labor enforcement grounds, and an additional 15 economies plus the EU on what the administration describes as structural excess manufacturing capacity. A separate hearing on the latter is scheduled for next week.

US Trade Representative Jamieson Greer framed the investigations as both a labor and a commercial issue. "These investigations will determine whether foreign governments have taken sufficient steps to prohibit the importation of goods produced with forced labor and how the failure to eradicate these abhorrent practices impacts US workers and businesses," he said in a March 12 statement, weeks after the Supreme Court struck down the administration's earlier attempt to impose broad tariffs under an emergency powers statute.

Scale of the Problem

Forced labor, defined by the International Labour Organization as work performed under threat of penalty and without consent, affects an estimated 27 million people worldwide, based on ILO's most recent data from 2021. The US already restricts such imports under Section 307 of the Tariff Act of 1930 and the Uyghur Forced Labor Prevention Act, enacted in 2022. The new Section 301 investigations would expand the government's toolkit by linking enforcement failures to potential tariff consequences.

The structure of any resulting tariffs remains undefined. Industry stakeholders are watching whether USTR will target specific product categories or apply broader country-level measures, and whether exclusion processes, which the administration has largely moved away from in its second term,  will be made available.

While businesses broadly expressed support for addressing forced labor, many pushed back on tariffs as the mechanism to do so, arguing the approach would harm compliant operators without meaningfully changing conditions abroad.

Apparel company Jockey acknowledged the administration's objective but wrote that "the use of Section 301 tariffs to achieve such results is flawed and will only serve to hurt the 'good actors.'” 

Delta Air Lines argued that the sector "presents limited forced labor exposure, is already subject to extensive regulatory oversight and traceability requirements and faces severe supply chain constraints." 

The Cheese Importers Association of America urged USTR to exclude dairy products, stating it "is not aware of any allegations of forced labor in the production of EU, UK, or Swiss dairy products or cheeses exported to the United States."

De Beers called for a risk-based framework, warning that a blanket approach "may restrict access to compliant supply chains and impose unnecessary compliance, sourcing, and due diligence costs on US businesses, without advancing forced labor eradication objectives."

Foreign governments also weighed in. Switzerland formally told USTR it "strongly rejects the allegations," while BusinessEurope pointed to the EU's own Forced Labour Regulation, set to take effect in late 2027, as evidence that enforcement mechanisms are already in development.

Sector Support

Not all industry voices opposed the direction. The American Honey Producers Association backed the probe, alleging that producers in India, Vietnam, Argentina and Brazil, which it said control more than 80% of the US honey market, benefit from practices that have pushed domestic producers toward unviable conditions. 

Solar Energy Manufacturers for America, representing non-Chinese solar producers, called on USTR to embed forced labor provisions directly into trade agreements, citing a 2025 US-Malaysia accord as a replicable model, and flagged a year-over-year decline in enforcement activity under the Uyghur Forced Labor Prevention Act as a vulnerability requiring foreign government cooperation to address.

Mexico's Private Sector Pushes Back on Section 301

During the second round of USMCA bilateral negotiations in Mexico City, Mexico's principal business organizations formally contested the application of Section 301 tariffs, delivering a document directly to USTR Jamieson Greer requesting full exclusion from the investigation. The coalition, comprising the Business Coordinating Council (CCE), the Confederation of Mexican Chambers of Industry (CONCAMIN) and the National Council of the Maquiladora and Export Manufacturing Industry (INDEX), argues that no evidence of overproduction of Mexican goods in the US market exists and that existing tariff structures already disadvantage local exporters.

CCE President José Medina warned that expanding Section 301 measures would disrupt cross-border investment and destabilize supply chains that underpin North American competitiveness against third-party producers. 

The automotive sector has emerged as a focal point: Mexican-assembled vehicles from US manufacturers currently face a 25% tariff, compared to a 15% rate applied to Japanese competitors,  a disparity that industry stakeholders say structurally penalizes North American production.

Unlike emergency powers, Section 301 establishes a formal procedural timeline, public comments opened March 17, 2026, with hearings scheduled for May 5, 2026, before any new trade restrictions are determined. For Mexico, an adverse finding could translate into permanent, sector-specific tariffs that challenge the duty-free protections established under USMCA.