The Canadian government told the Trump administration that new legislation combating forced labor in supply chains should shield Canada from new tariffs.
In a written submission to the United States Trade Representative’s office, the Government of Canada said it “remains committed to working closely with the United States to eradicate forced labor from global supply chains.”
“In light of Canada’s existing prohibition, complementary supply chain transparency measures, newly introduced standalone forced labor import legislation and continued commitment to Canada-U.S. co-operation, Canada respectfully submits that there is no basis for the imposition of additional Section 301 duties on Canadian goods,” the government said in its submission.
Ottawa’s case was among more than 1,500 written submissions from nations and industry groups ahead of a three-day hearing in Washington on President Donald Trump’s use of Section 301 of the Trade Act of 1974 to rebuild his global tariff wall around the United States.
United States Trade Representative Jamieson Greer announced in March that his office was launching trade investigations into 60 countries, including Canada.
Greer said Canada, Mexico, the United Kingdom and some other countries should be hit with 10% duties because they are not doing enough to enforce bans on forced labor.
He also proposed a 12.5% duty on dozens of other countries that have partial or no bans on forced labor in supply chains.
Canada already had legislation intended to curb forced labor in supply chains, which requires annual reports to the federal government. But the federal government tabled a bill last month to boost enforcement.
In separate submissions to the U.S. trade office, Canadian business and industry groups made the case that there are more effective paths to curbing the issue of forced labor than tariffs, particularly in the deeply integrated North American market.
“We urge USTR to assess Canada separately under Section 301 … suspend consideration of the proposed 10% tariff while Canada’s enforcement reforms are implemented and evaluated, and prioritize targeted bilateral enforcement co-operation over broad country-level measures,” Canadian Chamber of Commerce Vice President Matthew Holmes wrote in his submission.
The Section 301 investigations did not come as a surprise. It was clear the United States would be looking at new avenues to impose duties after the U.S. Supreme Court struck down Trump’s favorite tariff tool, which he used for his “Liberation Day” tariffs and fentanyl-related duties on Canada, Mexico and China, earlier this year.
In response to the top court’s ruling, Trump implemented a 10% worldwide tariff using Section 122 of the 1974 Trade Act. Those tariffs were always seen as temporary because they expire after 150 days — at the end of July — unless Congress votes to extend them.
The U.S.-Mexico-Canada Agreement on trade has shielded Canada from many of Trump’s tariffs. The country is still being slammed by separate duties on industries such as steel, aluminum, automobiles, and cabinetry.
Many Canadian submissions to the U.S. trade office argued that USMCA exemptions should remain in place regardless of the outcome of the trade investigation.
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