US forced labour tariffs: fixing the problem or taxing the world?

Over the past decade, the United States has deployed five distinct categories of tariffs under domestic trade laws: Section 232 (national security), Section 301 (unfair trade practices and intellectual property theft), Section 201 (global safeguards), Section 122 (balance-of-payments measures), and Emergency Reciprocal Tariffs. These are separate from the pre-existing WTO anti-dumping, countervailing, and anti-circumvention duties, which the US has also extensively leveraged as tariff instruments.

Interestingly, all eight categories of duties have been directed predominantly at China for multiple reasons, one of which is forced labour concerns.

However, US tariff policy is now expanding to economies that maintain substantial commercial linkages with China, effectively meaning tariffing the world.

The reality is that tariffs cannot eradicate forced labour. It must be addressed through national laws, effective enforcement, and supply-chain governance rather than through US tariff policy.

But the US has transformed tariffs from a policy tool into a central instrument of economic policy, and Pakistan has not been exempt. Of the eight duty categories discussed above, five have already been imposed on Pakistan, including last year’s reciprocal tariffs, which pushed tariffs on some value-added textile exports as high as 43.65 percent.

Following the US Supreme Court’s ruling against emergency reciprocal tariffs, the US Trade Representative (USTR), after concluding an investigation into 60 economies, has proposed new Section 301 tariffs relating to imports produced with forced labour.

The framework creates two categories. Economies that have imposed prohibitions on such imports or established partial systems to restrict them would face an additional tariff of 10 percent. Those that have not would face a higher tariff of 12.5 percent.

The good news is that these tariffs are not as high as the reciprocal tariffs. The bad news is that Section 301 faces a higher threshold for judicial reversal because it rests on an explicit delegation of authority from Congress, allowing the US administration to investigate unfair trade practices and impose tariffs.

More concerningly, the US has invoked Section 301 more than 130 times since its enactment.

With Section 301 back on the table, the world finds itself entering another round of tariff negotiations, and although Pakistan falls within the lower tariff category, it cannot afford to treat the issue as resolved and will need to undertake a number of measures.

Pakistan has already taken key forced labour measures:

Unlike two of its major competitors, India and Bangladesh, which fall within the higher 12.5 percent tariff category, Pakistan has already amended the Import Policy Order, 2022, to prohibit imports produced with forced labour.

The amendment builds on Pakistan’s existing commitments under the Convention on Forced Labour (C029), the Convention on the Abolition of Forced Labour (C105), and the 2014 Protocol to the Forced Labour Convention (P029). Interestingly, India has still not ratified the 2014 Protocol - the latest international framework for eradicating modern forced labour - despite its inclusion in the EU–India FTA text.

Yet Pakistan remains subject to the proposed tariff. This suggests that the issue is neither solely about Pakistan nor entirely about forced labour. To a large extent, it is about China and supply-chain realignment.

And this is where the US proposal becomes particularly interesting.

What your exports are made of matters:

The USTR’s proposed Textile Mechanism assumes that exporting economies can increase their use of US-origin inputs in exchange for lower tariff rates, with reduced-duty access linked to the volume of US textile inputs purchased. Although the proposal does not specify how compliance would be verified, tariff relief will likely depend on two factors: the structure of a country’s exports and its ability to incorporate and trace US-origin content.

The implications, therefore, are unlikely to be uniform.

In 2000, Pakistan, India, and Bangladesh had comparable export positions in the US market. Pakistan exported US$1.8 billion worth of textile and apparel products to the US, compared with US$2.7 billion for India and US$2.2 billion for Bangladesh.

Over the next 25 years, however, their trajectories diverged. By 2025, India’s textile and apparel exports had reached US$9.7 billion, followed by Bangladesh at US$8.4 billion. Pakistan, by contrast, exported only US$4.2 billion. (OTEXA; see Figure 1).

This divergence was driven largely by policy inconsistency and the high cost of doing business in Pakistan. However, export trends in the future will depend increasingly on input sourcing patterns.

Pakistan is already the second-largest buyer of US cotton, accounting for about 16 percent of US cotton exports. Since 94 percent of its textile exports to the US are value-added products, it is well placed to increase the use of US cotton, while at the same time expanding its export volumes and qualifying for any future tariff-relief mechanism.

Bangladesh may adapt even more easily. Its exports are concentrated in finished apparel, which already relies heavily on imported inputs (see Figure 2).

Bangladesh has also signalled its willingness to import more US cotton in exchange for tariff concessions.

India faces a different situation. Nearly half of its textile exports to the US consist of non-apparel textile products (see Figure 1). As a result, greater reliance on US cotton and intermediates may not align as easily with its export structure.

The US market is becoming increasingly difficult for textile suppliers.

Imports from Pakistan, India, and Bangladesh edged down during the first quarter of 2026 (see Figure 3), while the US continues to expand its use of tariff and non-tariff measures.

In this environment, economies that can prove their exports are free of forced labour and contain US-origin inputs may be better positioned to secure tariff relief. For now, this appears to be the only channel through which the US is pursuing negotiations.

The question is: how do they prove it?

Proving compliance begins with traceability:

For the past few years, I have advocated stronger trade compliance systems in Pakistan. At the center of that discussion is traceability. The difference now is that weak traceability is resulting in tariffs and trade losses.

According to US Customs and Border Protection, more than 42,800 shipments worth US$3.96 billion have been reviewed under the Uyghur Forced Labour Prevention Act (UFLPA), with more than half denied entry.

The scrutiny is not limited to China. Shipments worth nearly US$85 million from India and US$22.3 million from Pakistan have also been reviewed over concerns that they may contain inputs linked to high-risk Chinese supply chains.

Pakistan therefore needs a comprehensive forced labour import prohibition framework. At a minimum, it should include:

1. A clear legal definition of forced labour aligned with ILO standards to ensure consistency with international norms, facilitate trade, and reduce legal uncertainty.

2. A designated enforcement authority, preferably Pakistan Customs, with powers to investigate non-compliant imports and prevent them from entering Pakistan’s value chain.

3. Clear standards on the evidence required to restrict imports and enforce forced labour prohibitions.

4. A centralized database enabling information-sharing between Pakistan Customs and relevant agencies, including the Pakistan Single Window (PSW) and the National Compliance Centre (NCC), alongside a publicly accessible list identifying entities, products, sectors, and regions linked to forced labour risks.

5. A framework for basic digitization of all tiers of the supply chain.

6. Remediation procedures for cases where imported goods are found to have been produced using forced labour.

While such a framework would strengthen trade, compliance, and supply-chain transparency, the USTR may need to revisit aspects of its forced labour investigation. Placing the European Union in the forced-labour tariff category raises legitimate questions about the robustness of the findings and, consequently, the credibility of the proposed tariffs as a tool for combating forced labour.

Copyright Business Recorder, 2026