TLDR
The Trump administration proposed additional tariffs of 10 to 12.5 per cent on imports from 60 economies, including Australia, under Section 301 of the Trade Act of 1974, citing those countries' failure to ban goods made with forced labour. Australia, placed in the higher 12.5 per cent rate category, lodged a formal submission with the United States Trade Representative on 9 July 2026 arguing there is 'no credible evidentiary basis' for the finding against it. The procedural clock has largely run: written comments closed 6 July, hearings were held 7 July, and post-hearing rebuttals fell due five days after. USTR will now weigh submissions before deciding whether to impose the duties, with Australian exporters watching closely for an outcome that could reshape one of the country's most significant trading relationships.
KEY TAKEAWAYS
A charge Australia did not see coming
Finding Australia on a list alongside economies Washington has long viewed with suspicion over labour standards is jarring. Yet that is precisely where Canberra landed on 2 June 2026, when the Office of the United States Trade Representative published a Federal Register Notice proposing additional ad valorem duties on imports from 60 economies, citing each country's failure to prohibit goods produced with forced labour.[1] The notice carried the weight of Section 301 of the Trade Act of 1974, a provision that authorises USTR to impose duties on any foreign government's act, policy or practice deemed unreasonable and burdensome to US commerce.
Australia was placed in the higher of two proposed tariff tiers. Economies with some form of forced-labour prohibition or commitments would face an additional 10 per cent duty; all others, including Australia, would face 12.5 per cent.[1] The 60 economies under investigation collectively account for 99 per cent of US imports, a scope suggesting this is less a targeted sanction than a structural reconfiguration of how Washington uses trade law to export its labour standards.
The investigation and its origins
USTR initiated investigations on 12 March 2026 into the failure of various economies to impose and enforce a prohibition on goods produced wholly or partly with forced labour.[1] The process moved with unusual speed. By 2 June 2026, USTR had completed its report and published findings that all 60 economies, including close US allies, had failed to meet the bar Washington now considers necessary.
USTR's June 2026 report concluded that Australia had failed to impose and effectively enforce a forced-labour import prohibition, characterising that failure as unreasonable and burdensome to US commerce.[2] Section 301(c) empowers USTR to impose additional ad valorem duties to obtain the removal of practices it has found objectionable, and whether or not Washington's finding seems fair to Canberra, the statutory authority behind it is real.
The regulatory gap at the centre of the dispute
Australia's Modern Slavery Act 2018 is, by most comparative measures, a serious piece of legislation. It mandates reporting and voluntary due diligence on supply chains for entities above a revenue threshold. What it does not do, and what Washington has fastened upon, is legally prohibit the importation of goods produced with forced labour.[2] Reporting requirements, however rigorous, are not an import ban, and that gap gave USTR the opening it needed.
Australia has consistently earned the highest ranking in the US State Department's own Trafficking in Persons Report, the very instrument the US government uses to assess countries' efforts to combat modern slavery.[3] Washington is, in effect, using one arm of its own evaluative apparatus to penalise a country that another arm of that same apparatus rates as a top performer.
Australia's formal objection
Australia lodged a formal submission with USTR on 9 July 2026.[3] Erin Kelly, representing the Acting Trade Minister in Washington, said "there is no credible evidentiary basis" for the forced-labour findings against Australia.[3] Kelly also said "The strength of this economic relationship means that Australia should not be subject to the proposed action, or any tariff measure whatsoever."[3]
The submission rested on two principal arguments. First, Australia's standing in the US Trafficking in Persons Report, cited as evidence that USTR's characterisation of Australia's record is factually insupportable. Second, Australia's existing free trade agreement commitments, presented as demonstrating that bilateral labour standards obligations have already been addressed through treaty mechanisms. Imposing additional duties on top of existing FTA frameworks would be both legally inconsistent and diplomatically damaging, the submission implied.
The procedural clock
The Federal Register Notice set a tight consultative schedule. Requests to appear were due by 22 June 2026; written comments closed on 6 July 2026; public hearings were held on 7 July 2026; and post-hearing rebuttals were due five days after the hearings concluded.[1] That timeline has now largely elapsed, with USTR in the deliberative phase, weighing submissions from governments, industries and civil society before determining whether to proceed with the proposed duties.
Australia filed its submission on 9 July 2026, three days after written comments closed, placing it within the post-hearing rebuttal window rather than the primary comment period.[3] Governments are typically afforded greater procedural latitude than private parties in Section 301 proceedings, though whether USTR treats the submission as a rebuttal or as late comment may affect the weight it receives in deliberations.
What is at stake for Australian exporters
The proposed 12.5 per cent additional duty would apply across Australian goods entering the United States market. The Australia-United States Free Trade Agreement, which entered into force in 2005, eliminated tariffs on the overwhelming majority of bilateral trade over time, and an additional Section 301 duty layered on top of that framework would represent a significant reversal. Agricultural exporters, who have long relied on preferential access, would feel it acutely.
Kelly's submission invoked the bilateral economic relationship explicitly, framing the scale and depth of trade between the two countries as itself a reason USTR should not proceed. Whether Washington finds that argument compelling will depend on how the Trump administration weighs its Section 301 enforcement priorities against the diplomatic cost of penalising an ally that its own State Department ranks among the world's leaders in combating forced labour. USTR's investigation was launched on 12 March 2026, and the 60 economies it covers account for 99 per cent of US imports.[1]
SOURCES & CITATIONS
FREQUENTLY ASKED QUESTIONS
What is Section 301 of the Trade Act of 1974?
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Margaret Hale covers politics and policy for Bushletter. She brings a literary sensibility to business and political commentary.
