Canada Pushes Back Against Washington: No Basis for New Forced Labour Tariffs

Canada has pushed back against Washington’s attempt to impose new tariffs on Canadian goods under the banner of fighting forced labour, arguing that Ottawa shares the same goal of eliminating abusive labour practices from global supply chains but sees no fair basis for punishing Canadian exports.

According to The Canadian Press, the Canadian government told the Office of the United States Trade Representative in a written submission that Canada “remains committed to working closely with the United States to eradicate forced labour from global supply chains.” Ottawa added that, in light of Canada’s existing import ban, supply-chain transparency measures and newly introduced forced labour legislation, there is no basis for additional Section 301 duties on Canadian goods.

The dispute is part of a wider U.S. trade investigation under Section 301 of the Trade Act of 1974, a tool used by Washington to respond to practices it considers unfair or harmful to American commerce. The U.S. Trade Representative launched investigations into 60 trading partners, including Canada, over claims that some countries are not doing enough to prevent goods made with forced labour from entering international trade.

The proposed U.S. action could place a 10% tariff on Canadian goods that are not otherwise exempt, while some other countries could face duties of up to 12.5%. Legal analysis by Fasken notes that CUSMA-compliant goods are currently among the listed exemptions, but warns that the future of that carve-out may depend on whether Canada can demonstrate stronger enforcement.

For Ottawa, the case is sensitive because it goes beyond labour rights and directly touches the future of Canada-U.S. trade. The Canadian economy is deeply connected to the American market, and many products cross the border more than once during processing, manufacturing or distribution. Canadian business and agriculture groups have warned that broad tariffs could disrupt supply chains, increase input costs and weaken competitiveness on both sides of the border.

Canada has already moved to strengthen its domestic framework. In June, Global Affairs Canada announced new legislation aimed at reinforcing the prohibition on importing goods produced by forced labour. The proposed law would strengthen Canada’s ability to identify, intercept and prohibit goods linked to forced labour at the border, while providing more certainty and transparency for businesses.

Washington, however, argues that the issue is not only whether Canada has laws on paper, but whether those laws are being enforced effectively. The USTR’s findings criticized Canada’s enforcement record and pointed to limited interception data and transparency gaps, particularly around information published by the Canada Border Services Agency.

The proposed tariffs have also triggered criticism inside the United States. Reuters reported that 22 Democratic state attorneys general opposed the Trump administration’s tariff plan, arguing that it could raise prices for consumers and represents an abuse of Section 301 authority rather than a targeted response to forced labour.

Reuters also reported that countries and industry groups used this week’s USTR hearings to argue for exemptions from the proposed measures, while U.S. officials are expected to review the submissions before issuing a final decision.

For now, Canada’s message to Washington is clear: cooperation on forced labour is necessary, stronger enforcement is possible, but new tariffs on Canadian exports are not the right or fair way to address the problem.