Australian exporters now face a higher tariff on most goods entering the United States after the Trump administration imposed a new 12.5 percent duty linked to Australia’s failure to introduce a ban on imports produced using forced labour.
Key Australian export categories, including beef, gold and copper, are exempt from the new measure, although separate US sectoral tariffs continue to apply to some products.
The new tariff, which took effect on 24 July and replaced the temporary 10 percent global tariff, forms part of a broader regime affecting goods from 60 economies following investigations by the Office of the United States Trade Representative (USTR).
The investigations examined whether major trading partners had failed to prohibit the importation of goods produced wholly or partly using forced labour.
The USTR determined that certain policies and practices of all 60 economies were unreasonable and burdened or restricted US commerce.
Countries including Canada, India, Mexico and the United Kingdom received a 10 percent rate because they had introduced a forced labour import prohibition, established a partial regime or made relevant commitments to the US.
Australia was placed among economies subject to the higher 12.5 percent tariff, alongside China, Hong Kong, New Zealand, Singapore, Thailand and Vietnam.
Australia’s Modern Slavery Act currently requires large entities to report annually on modern slavery risks in their operations and supply chains, but the US investigation focused specifically on enforceable import prohibitions.
As reported last week by PASA, the Federal Government has announced plans for the biggest overhaul of the Act since its introduction in 2018, including a new criminal offence for companies with annual consolidated revenue above $100 million that fail to prevent modern slavery in their supply chains.
Announcing the new tariffs, US Trade Representative Jamieson Greer said they were intended to encourage other economies to strengthen their laws.
“President Trump recognises that decades of moral suasion have not eradicated forced labour from global supply chains,” he said.
“The United States has had a forced labour import ban for nearly a century, and rigorously enforces it; it’s well past time for our trading partners to do the same.”
The Australian Federal Government has strongly rejected the reasoning behind the decision, arguing the country has some of the world’s strongest measures for addressing modern slavery.
“These tariffs are unjustified, inconsistent with our free trade agreement and should be removed,” Australia’s Trade Minister Don Farrell told reporters.
“We believe that amongst all of the countries in the world, Australia does take the issue of modern slavery seriously, and will continue to do that.”
In a formal submission made to the USTR before the tariffs were finalised, the Australian Federal Government pointed to the US annual Trafficking in Persons Report, which has consistently awarded Australia its highest possible ranking.
The submission also highlighted the strength of the bilateral economic relationship and Australia’s cooperation with the US on trade, beef access and critical minerals.
Prime Minister Anthony Albanese has confirmed the government will continue pressing its case directly with the Trump administration.
“We’ll raise it at every level in the Australia-U.S. relationship; we’ve already done so,” he said.
Deputy Prime Minister Richard Marles described the decision as making “no sense”, while Farrell noted that Australia’s largest exports to the US would continue entering free of the new tariff.
“We continue to make that argument to the Trump administration, both in terms of trade but also in terms of our stance in relation to forced labour,” said Marles.
Agreeing that combating forced labour is a priority, Marles added “we share an objective there to stamp that out.”
“But we would have also made clear that the legal regime that we have in Australia in respect of forced labour is amongst the best legal regimes that exist in the world today.
“We’re making that point very clearly to the Trump administration as well.”
Australian business groups have responded with equal force, with the Business Council of Australia (BCA) saying the US was “penalising Australian businesses for no justifiable reason”.
“The United States Trade Representative’s finding rests on the narrow claim that Australia lacks a US-style ban on importing goods made with forced labour, despite our already strong Modern Slavery Act, and without identifying a single company, enforcement failure, or quantified trade impact,” said BCA Chief Executive Bran Black.
“The Business Council supports free and open trade, and we see no basis for these new tariffs.
“This decision will make it harder for Australian businesses to compete and sell their products into the US market, hurting investment and our jobs.”
Australian Industry Group Chief Executive Innes Willox said the tariffs were both disappointing and meritless.
“Economies around the globe are understandably trying to address the scourge of forced labour, but without coordination on definitions or solutions, companies are left caught in the middle, navigating inconsistent and occasionally competing cross-jurisdictional rules and reporting obligations,” he said.
“Australia has to date had one of the strongest Modern Slavery Acts that has assisted Australian companies to interrogate their supply chains.
“Today’s assessment by the US demonstrates the risks they face in unilateral determinations of how best to address forced labour in global supply chains, and the ever-present need for World Trade Organisation coordination on these matters.”
When the tariff was first proposed in June, experts warned Australia risks becoming a “dumping ground” for goods rejected by countries with enforceable forced labour import bans.
At the time, Professor Justine Nolan, Director of the Australian Human Rights Institute at UNSW Sydney, told Sky News Australia the move had traces of “pure trade politics”, but could not be dismissed entirely.
“What (the US is) really looking for is to have something similar to what they’ve got, which is a forced labour import ban.
“What (a ban) would do is it would mean that goods that are tainted with forced labour, that are coming through supply chains, coming into Australia, this would stop those at the border.
“The US has a law like this, the EU is phasing in a law like this, other countries like Mexico, Canada, are also bringing in these types of laws.
“What we have at the moment with Australia without that law is we’re really at risk of being a dumping ground for goods that are being made on the backs of slaves and they’re coming into Australia.”
