Trump's New Forced Labor Tariffs Impact Pakistan, China, and 60 Trading Partners as the U.S. Rebuilds Global Trade Barriers

Trump's New Forced Labor Tariffs Impact Pakistan, China, and 60 Trading Partners as the U.S. Rebuilds Global Trade Barriers

The United States has entered a new phase in its trade policy after President Donald Trump's administration imposed new import tariffs on 60 trading partners, including Pakistan, China, the European Union, India, Japan, South Korea, Canada, Mexico, and the United Kingdom. The White House announced these measures on July 24, 2026. The tariffs are based on claims that these countries have not effectively stopped goods made with forced labor from entering their supply chains. This decision has triggered strong responses from governments around the world and may change international trade, supply chains, and global economic relations in the coming months.

Under the new policy, the United States has introduced 10% and 12.5% import tariffs covering roughly 99.4% of all U.S. imports. Although the tariffs affect almost the entire import market, the administration has also announced several key exemptions to minimize disruption in important industries. This move marks the White House's first significant effort to rebuild President Trump's global tariff strategy after the U.S. Supreme Court overturned his earlier reciprocal tariff policy earlier this year.

In February 2026, the U.S. Supreme Court struck down Trump's reciprocal tariffs, which had imposed duties ranging from 10% to 50% on imports under a national emergency law aimed at lowering America's trade deficit. The ruling forced the administration to find a different legal basis to maintain broad import tariffs. Rather than using emergency powers, the White House has now invoked Section 301 of the Trade Act of 1974, a trade law that has withstood previous court challenges and provides a stronger legal foundation for imposing tariffs on countries accused of unfair trade practices.

According to the U.S. government, the new tariffs aim to tackle what it sees as a longstanding failure by trading partners to remove products made with forced labor from their supply chains. Washington argues that while the U.S. has enforced an import ban on forced labor goods for nearly a century, many countries have put laws or policies in place without effectively enforcing them. U.S. Trade Representative Jamieson Greer stated that this action aims to fight both human rights abuses and unfair trade practices while improving conditions for workers globally.

The new tariffs officially took effect at 12:01 a.m. Eastern Time on July 24, right after Trump's temporary 10% global tariff expired, which had lasted 150 days. By implementing the new duties at the exact moment the temporary tariff ended, the administration ensured a seamless transition in its overall tariff structure. However, goods already in transit before the deadline will remain exempt until July 28, providing businesses a brief transition period.

One significant aspect of this announcement is that Pakistan has been placed in the 10% tariff category. Pakistan joins Argentina, Bangladesh, Britain, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Sri Lanka, and Trinidad and Tobago, all of which received a 10% tariff. The White House states that these countries either have existing bans or have announced plans to limit imports made with forced labor but have not shown effective enforcement of those rules.

The tariff structure varies for several advanced economies. The European Union, Japan, South Korea, Taiwan, and Switzerland were assigned rates that, when combined with existing Most Favored Nation (MFN) tariff schedules, lead to total tariff levels of 10% or 12.5%. Meanwhile, another 38 countries fall directly under the 12.5% tariff category.

Among those facing the higher tariff rate are China and Vietnam. The United States continues to accuse China of using forced labor involving Uyghur minorities in the Xinjiang region, which Beijing consistently denies. Vietnam, despite issuing a new government decree this week detailing more restrictions on imports produced with forced labor, has also been placed in the higher tariff category.

These tariffs may not be the final step in the administration's trade strategy. U.S. officials are already conducting another Section 301 investigation focused on what they call global industrial excess capacity. This investigation targets 16 major trading partners, including the European Union, China, India, Japan, South Korea, and Switzerland. If Washington determines that these countries contribute to unfair market conditions through excessive industrial production, additional tariffs could be introduced later this year.

Financial markets reacted cautiously to the announcement. U.S. Treasury bond yields rose slightly as investors considered that higher import costs might increase inflation. Still, the broader market response remained limited because investors were mainly focused on ongoing geopolitical tensions in the Middle East rather than solely on trade issues.

Although the tariffs cover nearly all imports, the White House has exempted several strategically important sectors. Products excluded from the new duties include oil, natural gas, fertilizers, certain food products, aircraft and aircraft parts, critical minerals, as well as goods already subject to Section 232 national security tariffs, including automobiles, steel, aluminum, and copper. These exemptions aim to lessen the impact on essential industries, national security priorities, and energy markets.

The administration has also expanded its exemption list by adding about 471 more products, reflecting adjustments made after consulting with businesses and industry groups. Trade experts believe these exemptions are meant to limit disruptions while allowing the administration to pursue its broader trade objectives.

The European Union responded with caution, noting that the new tariff structure aligns broadly with previous commitments made between Brussels and Washington. A spokesperson for the European Commission said the outcome creates positive momentum for ongoing discussions about further tariff exemptions and deeper economic cooperation.

France's Trade Minister Nicolas Forissier acknowledged that questions remain about the legal foundation of the tariffs. However, he stated that the announcement provides businesses with greater clarity about future trade conditions.

Switzerland also rejected the U.S. claims about forced labor but noted that Washington had respected previously established tariff ceilings of up to 12.5%, consistent with bilateral commitments.

The United Kingdom took a comparatively positive view. British officials said their existing trade agreement with the United States remains intact and pointed out that the latest changes eliminate U.S. tariffs on British whisky and medical technology products while giving British steel exporters a lower tariff rate compared to some competitors. However, the British Chambers of Commerce described the overall outcome as mixed, mentioning that while some industries benefit, Britain could lose its advantages over the European Union and other trading partners in several product categories.

China strongly criticized the new measures, reiterating its long-held view that unilateral tariffs damage global trade and that trade wars benefit no one. U.S. officials had previously informed their Chinese counterparts that Washington plans to restore Trump's second-term tariffs on Chinese goods to the 20% level agreed during the November 2025 trade truce between President Donald Trump and Chinese President Xi Jinping. They emphasized that they do not currently intend to exceed that ceiling. Before the latest announcement, China's tariff rate had dropped to 10%, excluding the separate 25% tariffs imposed during Trump's first term on various industrial products.

Australia and Brazil also condemned the new tariffs as unwarranted and announced plans to seek their removal through diplomatic means. Norway stated there was no valid reason for these measures. Canada, which had already faced additional U.S. tariffs covering about $20 billion worth of goods earlier this week, took a more cautious stance. Canadian Minister responsible for U.S. trade Dominic LeBlanc said Ottawa would continue constructive discussions with Washington in the coming weeks to resolve outstanding trade issues for both countries' mutual benefit.

Despite widespread criticism, some industries welcomed the decision. The Antwerp World Diamond Centre noted the restoration of the tariff exemption for polished diamonds as crucial for Belgium's diamond industry. Belgium exported around $2.1 billion worth of polished diamonds to the United States in 2024. That exemption had lapsed following the Supreme Court ruling in February but has now been reinstated under the new tariff framework, providing essential relief to one of Europe's largest diamond trading hubs.

Overall, President Trump's latest tariff initiative signifies more than just a routine change in import duties. It marks a notable shift in America's global trade strategy by using forced labor enforcement as the basis for rebuilding extensive tariffs after the Supreme Court blocked the previous reciprocal tariff system. While the U.S. argues that these measures are necessary to protect workers' rights and promote fair competition, many trading partners see them as a step toward unilateral economic protectionism.

For Pakistan, the new 10% tariff adds uncertainty for exporters trying to access the U.S. market. While essential goods and some key sectors are exempt, higher import costs may hurt the competitiveness of certain Pakistani exports over time. If the ongoing Section 301 investigation into excess industrial capacity leads to more tariffs, the world could face deeper trade tensions, adjustments in supply chains, inflation, and changing investment flows. As governments prepare their diplomatic responses and businesses rethink their global supply chains, the latest U.S. trade measures are expected to be some of the most closely observed international economic events of 2026.

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