Mexico | Favorable position on new US tariffs under Section 301 for forced labor

Summary

On July 23, the USTR imposed new Section 301 tariffs on imports from 60 economies. Mexico faces an additional 10% tariff for failing to effectively enforce its ban on goods produced with forced labor, constituting a USMCA violation.

Key points

• Key points:
• The USTR imposed tariffs of 10% or 12.5% on goods from 60 economies, which account for 99.4% of U.S. imports, subject to multiple exclusions.
• The United States argues that these tariffs apply to countries that do not effectively combat forced labor. However, it has not presented robust investigations supporting that claim. Rather than responding to a genuine concern over forced labor, the measure appears intended to replace the temporary tariffs imposed under Section 122 following the Supreme Court’s decision questioning the legality of the IEEPA tariffs.
• Mexico, Canada, and 15 other trading partners became subject to a 10% rate because they have an import ban, a partial regime, or commitments to establish and enforce a ban on imports produced with forced labor.
• For the European Union and Taiwan, the total tariff, including the most-favored-nation (MFN) rate, is capped at 10%; for Japan, South Korea, and Switzerland, the cap is 12.5%. All other economies are subject to an additional 12.5% tariff. Mexican and Canadian goods entering duty-free under the USMCA are exempt.
• Products subject to Section 232 tariffs are also excluded, including numerous steel, aluminum, and copper goods, automobiles, auto parts, heavy vehicles, lumber, and semiconductors.

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