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Ralph Jennings

Fresh US tariffs targeting alleged forced labour risk legal challenges over possible misuse of the underlying law, but major Chinese companies already see the impact of the levies easing and expect new hurdles from other trade barriers, according to two reports.
The legal foundation for US President Donald Trump’s 10 to 12.5 per cent tariffs under Section 301 of the Trade Act of 1974 is “not rock solid”, the Washington-based think tank Centre for Strategic and International Studies said in a report on Monday.
The US, which stunned the world last year with sweeping tariffs of an intensity not seen in more than a century, announced the latest wave on July 23 against 60 economies including China, India, Japan and South Korea.
Washington said a probe had triggered the latest duties, arguing that existing measures had not kept goods produced with forced labour out of supply chains.
Our analysis suggests that the Trump administration’s move to reimpose high tariffs faces some serious risks
Centre for Strategic and International Studies
“The forced-labour Section 301 investigation has some unique features that make it potentially vulnerable to a court challenge on different grounds,” said the report written by trade experts Scott Kennedy and Claire Reade.
“Our analysis suggests that the Trump administration’s move to reimpose high tariffs faces some serious risks, especially if care is not taken to meet the relevant statute’s requirements.”
The Section 301 duties seek to replace Trump’s sweeping 2025 tariff package that the US Supreme Court struck down in February.
Some believe Congress intended Section 301 as a “rifle shot” statute to combat unfair practices by individual trading partners and that a uniform set of tariffs on 97 to 99 per cent of US imports “clashes directly with the Constitution”, the think tank said.
Congress would have the “exclusive responsibility” to impose such broad tariffs, it said.
“Others argue that the imposition of relatively uniform low tariffs on almost all trade demonstrates that the effort is not meant to attack an unreasonable trading practice so it can be eliminated, but is instead aimed at increasing tariffs for other reasons, therefore qualifying as a misuse of Section 301,” the think tank said.
Small businesses have already sued in the US to block the forced-labour tariffs and a coalition of 25 US states has followed with additional litigation.
But UBS Investment Research found in a survey of Chinese company executives that tariff risks were “likely to be limited” and that US-bound trade was recovering.
Exporters’ recent orders to the US had reversed earlier net declines, and the share of executives reporting a negative impact from US trade policy fell “modestly”, the analysis service of Swiss investment bank UBS said on Monday.
Companies were increasingly concerned now about “policy risks beyond traditional trade measures” from abroad, it said.
Local-content requirements, investment screening and procurement restrictions were among the less traditional measures, UBS said, adding that some of the obstacles could force deeper localisation or restrict market access.


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Policy

Measures tied to alleged forced labour carry litigation risk, as localisation and procurement rules now weigh on Chinese firms, reports say


Measures tied to alleged forced labour carry litigation risk, as localisation and procurement rules now weigh on Chinese firms, reports say.


US tariffs on forced labour face legal risk as Chinese firms see impact easing: reports

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Measures tied to alleged forced labour carry litigation risk, as localisation and procurement rules now weigh on Chinese firms, reports say

Measures tied to alleged forced labour carry litigation risk, as localisation and procurement rules now weigh on Chinese firms, reports say