U.S. Proposes 12.5% Tariff on Australian Imports Over Forced Labor Allegations

The proposed tariff, affecting 54 nations, would replace an existing 10% duty and is currently under public consultation.

Announcement and Scope

The Office of the United States Trade Representative (USTR) announced the proposed tariff on April 2, 2025. The tariff rate of 12.5% applies to imports from 54 countries, including Australia, China, India, the United Kingdom, Japan, and New Zealand. A separate group of six economies—Canada, the European Union, Ecuador, Indonesia, Mexico, and Pakistan—face a lower proposed tariff of 10%.

The total 60 economies reviewed account for 99.4% of US imports. The proposed tariff replaces an existing 10% tariff on all countries that was imposed in February and is due to expire in July; it does not stack on top of that duty.

Legal and Investigative Basis

The proposed tariff is the result of an investigation conducted under Section 301 of the Trade Act of 1974. The investigation was initiated after the US Supreme Court struck down a previous tariff authority in February 2025.

USTR Jamieson Greer stated that the administration would fast-track investigations focused on forced labor to provide legal justification for new tariffs.

A report accompanying the decision provided no specific evidence regarding each country's practices. Australia's tariff was described as the highest among those resulting from this specific investigation.

Certain products are exempt from the proposed tariff, including energy, rare earths, beef, pharmaceuticals, coffee, some fruits and vegetables, gold, metals, and specific fuels and chemicals.

Justification by the US

USTR Jamieson Greer stated that countries failing to address forced labor in supply chains create an unlevel playing field for American workers. The US investigation found that countries including Australia were subjecting US producers to unfair competition from forced labor goods.

The tariffs are reported to be based on Section 307 of the US Tariff Act of 1930 and the 2022 Uyghur Forced Labor Prevention Act. The USTR has cited International Labour Organization (ILO) estimates that 27.6 million people were engaged in forced labor globally in 2021.

Reactions and Statements

Australian Government

A spokesperson for Trade Minister Don Farrell stated that Australia considers any tariffs on Australian exports to the US "unjustified" and inconsistent with the Australia-US Free Trade Agreement.

The spokesperson noted Australia has "robust, comprehensive and world-leading legislation" addressing forced labor and modern slavery.

Prime Minister Anthony Albanese called the proposed tariff "unjustified," arguing Australia has strong modern slavery legislation. Foreign Minister Penny Wong reiterated Australia's opposition to tariffs and commitment to open trade. Trade Minister Don Farrell met with USTR Jamieson Greer in Paris to argue against the tariff.

Other Officials and Experts

• Chris Evans, Australia's anti-slavery commissioner, stated that the US investigation was cursory and not genuinely motivated by human rights concerns. He described the measure as a distraction and weaponisation of trade measures.
• John Kunkel, senior fellow at the University of Sydney's United States Studies Centre, stated that Greer is attempting to restore elements of the Trump tariff regime on a more solid legal basis.
• Joe Hockey, former Australian ambassador to the US, suggested the tariffs are motivated by US fiscal needs.
• Patrick Childress, trade lawyer, stated the administration was seeking continuity in tariff policy after the Supreme Court ruling.

Australia's Domestic Context

Australia's Modern Slavery Act was passed in 2018. The act requires companies to disclose risks of slavery in their supply chains but does not impose penalties for non-compliance or mandate mandatory due diligence.

A 2023 independent review found Australia's Modern Slavery Act has not produced measurable change for victims. The review recommended penalties for non-compliance and a human rights due diligence requirement.

Chris Evans has advocated for new legislation to mandate that Australian companies address modern slavery within their supply chains. He stated that current laws are effectively voluntary, lacking penalties for non-reporting or quality assessment of compliance efforts.

He warned that Australia risks becoming a destination for slave-made goods due to its weaker laws compared to key markets like Europe.

Statistics and Reports

• The International Labour Organization estimates 27.6 million people were engaged in forced labor globally in 2021.
• An estimated 50 million people worldwide are in modern slavery, with over half in forced labor.
• Australia is estimated to have over 41,000 people in forced labor or modern slavery.
• Reports of human trafficking to Australian Federal Police have nearly doubled in five years.
• Over 21% of Australia's imports in the last financial year were linked to supply chains where modern slavery is known to occur, according to Fair Supply.
• In March 2025, the UN Committee on Economic, Social and Cultural Rights called on Australia to introduce mandatory human rights due diligence.
• A coalition of over 100 investors, businesses, unions, and civil society organizations called for due diligence requirements on large companies operating in Australia.

Next Steps and Process

The proposed tariff will not take effect immediately. A public consultation process is underway, with hearings beginning July 7, 2025. The US is accepting feedback on the tariffs until July 6, 2025.

Australia has less than three weeks to submit a response to the proposed tariff.

The US is also conducting a Section 301 investigation into manufacturing overcapacity, which may lead to additional tariffs on other countries. Future investigations could target Australian policies such as the Pharmaceutical Benefits Scheme and digital news bargaining laws.