United States expands use of tariffs in response to labor and human rights concerns abroad

Alert

11 November 2025

12 min read

US trade restrictions targeting labor rights concerns in foreign countries and their potential effects on US competitiveness have expanded again in recent months, widening the field of trade risks companies must consider. The Trump administration is raising labor rights concerns as a basis for trade restrictions in new ways: considering whether low wages violate antidumping duty laws, proposing country-wide Section 301 tariffs to pressure countries to improve labor rights, and asking countries to commit to adopting prohibitions on imports of goods made with forced labor in President Trump’s “reciprocal trade agreements."

The growth of trade compliance risks related to labor rights has been underway for several years, but the United States’ actions have typically focused on targeted enforcement measures. The recent actions demonstrate a broadening of enforcement beyond targeting specific entities, while also raising the pressure for other countries to adopt the US approach.

Failure to respect minimum wage laws could result in higher anti-dumping duties

In an emerging trend in US antidumping (AD) investigations, the Department of Commerce (DOC) has begun considering a foreign government’s failure to enforce its own labor laws as a potential factor in setting tariffs. In AD investigations, DOC can disregard the prices or costs maintained in the normal course of business of a respondent if the DOC finds that a “particular market situation” (PMS) exists such that the cost of materials and fabrication or processing does not “accurately reflect the cost of production in the ordinary course of trade.”¹ DOC may then use an alternative calculation methodology for those costs, which usually results in a higher dumping margin (i.e., antidumping duty rate). DOC revised its regulations in March 2024 to list a government’s failure to enforce its property, human rights, labor, or environmental protection laws and policies, or where those laws and policies are otherwise shown to be ineffective, as examples of PMS.²

Recent investigations have considered labor rights

The ongoing antidumping investigation on imports of Chassis and Subassemblies thereof from Thailand appears to be the first case that addressed the “labor” example. DOC considered if the Thai government’s failure to enforce the country’s minimum wage laws constituted a PMS with respect to labor costs of the Thai respondents. The petitioners alleged that the Thai government does not have the necessary laws in place to ensure that migrant workers from Myanmar (Burma) are paid adequate wages, and that such use of migrant labor at exploitative levels drives down overall wages in the Thai manufacturing sector. DOC preliminarily found that the petitioners did not support their allegation, because (1) migrant workers from Myanmar are concentrated near the western border, on the other side of the country from where the respondent manufacturers are located; (2) the region where the respondent manufacturers are located accounts for a small percentage of Myanmar’s migrant population in Thailand; and (3) less than one-fifth of migrant workers from Myanmar work in the manufacturing sector.

DOC considered similar PMS allegations related to labor rights in Prestressed Concrete Steel Wire Strand from Malaysia. In that investigation, DOC considered the petitioners’ PMS allegation that (1) there exists forced labor, human trafficking, and human rights abuses among migrant populations in specific sectors of the Malaysian economy; (2) low-wage migrant labor depresses wages for workers across the Malaysian economy; (3) the government of Malaysia does not effectively enforce labor laws; and (4) the respondents’ held anti-union/anti-worker sentiment. DOC preliminary found that petitioners did not support their allegation, primarily because there is inadequate evidence that these issues depressed wages in steel wire strand manufacturing.

DOC may soon set an AD duty using a labor-related PMS

Though DOC rejected the labor rights PMS arguments in the chasses and steel wire strand cases, it did not foreclose the possibility that it could make a different finding if another case presented a different fact pattern. In Raw Honey from India, DOC is now considering the petitioners’ PMS allegation that the government of India’s failure to enforce laws protecting workers’ rights have resulted in 90 percent of India’s workforce being engaged in informal work for which there is little or no enforcement of labor laws. DOC preliminarily found that there is likely a PMS, because the evidence indicates that enforcement of labor rights in the informal sector is inadequate and the informal sector provides approximately 70% of the honey and bee wax market in India. DOC will solicit information to quantify the labor cost distortion after the preliminary determination. The case may become the first in which a labor distortion affects an AD duty rate.

Going forward, companies manufacturing in jurisdictions that do not uniformly enforce labor laws for all types of workers and across all sectors of the economy may face a greater risk of higher antidumping duties as DOC may find a PMS exists with respect to their labor costs.

The first Section 301 investigation targeting labor rights and rule of law violations

On October 20, 2025, USTR issued the results of the Section 301 investigation into allegations that labor rights violations and challenges to the rule of law in Nicaragua are an unreasonable burden on US commerce, proposing tariffs as high as 100% to obtain an elimination of these practices.³ The Nicaragua investigation marks the first time the United States has ever invoked Section 301’s explicit authorities to target labor rights concerns. Section 301 of the Trade Act of 1974, at 19 U.S.C. § 2411(d), defines “acts, policies, and practices that are unreasonable” (and therefore potentially actionable if the subject act, policy, or practice also “burdens or restricts United States commerce”) to include: “any combination of acts, policies, or practices, which . . . constitutes a persistent pattern of conduct that — (I) denies workers the right of association, (II) denies workers the right to organize and bargain collectively, (III) permits any form of forced or compulsory labor, (IV) fails to provide a minimum age for the employment of children, or (V) fails to provide standards for minimum wages, hours of work, and occupational safety and health of workers[.]”

The labor-related section of the report finds violations of rights to freedom of association and collective bargaining, forced labor and child labor, and other workplace abuses. The report’s findings rely heavily on the US Department of Labor Bureau of International Labor Affairs’ (ILAB) “List of Goods Produced by Child Labor or Forced Labor,” in which ILAB documents the presence of child labor in the Nicaraguan banana, coffee, gold, gravel, shellfish, pumice, and tobacco industries and deems the country to have “made minimal advancement in efforts to eliminate the worst forms of child labor.”⁴

Proposed actions target all US-Nicaragua trade

Instead of targeted enforcement, USTR is proposing broad restrictions on all trade with Nicaragua, including imposition of tariff rates of up to 100% on all imports and suspension of all US commitments to Nicaragua under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), in order to “to obtain the elimination of” the identified practices.⁵

Unlike the new use of labor cost factors in PMS, USTR does not single out specific products and companies or calculate specific tariff rates intended to offset any competitive advantage a company may gain from exploitative labor practices or forced labor and child labor. In fact, despite USTR’s forced labor and child labor findings, US Customs and Border Protection (CBP) has not issued any Section 307 Withhold Release Orders or Findings targeting companies in Nicaragua alleged to be exporting products to the United States made with forced labor or child labor. It is unclear from USTR’s findings whether the US government believes that products made with forced labor or child labor in Nicaragua are exported to the United States at all. Still, this has not kept USTR from proposing broad restrictions on all trade with Nicaragua.

A new strategy of labor rights enforcement?

USTR does not explain the strategy behind its proposal for broad trade restrictions, but such a punitive action may pressure the Nicaraguan government into making a diplomatic commitment to resolving the labor rights violations described in the report. Leveraging broad Section 301 actions to pressure foreign governments to address domestic labor rights challenges – even when the United States has opted not to employ more targeted measures – would be a significant escalation of efforts to use trade tools to address labor-related concerns.

Pursuing forced labor import prohibitions in “reciprocal trade agreements”

Prohibitions on imports made wholly or in part with forced labor and child labor have also emerged in President Trump’s “reciprocal trade agreement” negotiations in recent months, reinforcing efforts by the United States to promote its enforcement approach to other countries. President Trump signed trade deals on October 26, 2025 with Malaysia and Cambodia, formalizing the reduced reciprocal tariff rate of 19% that President Trump issued on July 31, 2025.⁶In exchange for the reduced rate, Malaysia and Cambodia have committed to resolve certain specific trade concerns, lower tariffs on US goods, and cooperate with US economic security policies, among other issues. The two agreements are the first complete “reciprocal trade agreements” President Trump has concluded since unveiling his reciprocal trade policy in April 2025.

Commitments to adopt forced labor import prohibitions

The Malaysia and Cambodia agreements include commitments to adopt forced labor import prohibitions in each country. The Malaysia agreement states that “Malaysia shall adopt and implement a prohibition on the importation of goods mined, produced, or manufactured wholly or in part by forced or compulsory labor”⁷ within two years and the Cambodia agreement states that “Cambodia shall adopt and effectively implement a prohibition on the importation of goods mined, produced, or manufactured wholly or in part by forced or compulsory labor, as defined by the relevant International Labor Organization (ILO) instruments to which Cambodia is a party.”⁸ Both agreements reference the United States’ Section 307 forced labor import prohibition, suggesting Malaysia and Cambodia should consider mirroring entity-level import prohibitions imposed by the United States.

The Trump administration may seek to include similar commitments in all its trade deals. A joint statement issued in July 2025 announcing a potential US-Indonesia agreement references Indonesia’s intent to “adopt and implement a prohibition on the importation of goods produced by forced or compulsory labor[.]”⁹

A return of the USMCA agenda?

The US practice of incorporating forced labor import prohibitions into trade agreements began with the United States – Mexico – Canada Agreement (USMCA) during President Trump’s first term of office.¹⁰ Building more rigorous and enforceable labor rights commitments into the agreement, including a forced labor import prohibition and the creation of the USMCA Rapid Response Labor Mechanism (RRM), was critical to the first Trump administration’s efforts to win bipartisan Congressional support for the deal. At the time, it appeared that the new labor commitments could become part of a compromise to build support for other prospective free trade agreements by pairing market opening with stronger labor protections.

US free trade agreement negotiations have been mostly dormant since the USMCA, leaving uncertainty about whether the bipartisan compromise around incorporating aggressive labor rights commitments into US trade policy could endure. The Malaysia and Cambodia agreements themselves are not full free trade agreements and may not last past the end of the Trump administration’s “reciprocal trade” policy, but including the forced labor import provision demonstrates the staying power of these labor rights commitments in US policy.¹¹

Moreover, as the 2026 USMCA Review looms,¹² in public comments to USTR, some groups are asking USTR to negotiate for an expansion of the labor rights commitments in the USMCA. For example, Democratic members of the Congressional Labor Caucus,¹³ along with the United Steelworkers Union¹⁴want USTR to use the USMCA Review to strengthen and expand the RRM. They want the parties to implement reforms that make it easier for petitioners to bring claims, harder for parties to use the panel process to delay relief, expand the sectors and labor violations covered, and improve transparency and accessibility. These groups have also asked USTR to ensure that Canada and Mexico do more to fully enforce the existing forced labor bans in each country, with the National Moreover, as the 2026 USMCA Review looms, in public comments to USTR, some groups are asking USTR to negotiate for an expansion of the labor rights commitments in the USMCA. For example, Democratic members of the Congressional Labor Caucus, along with the United Steelworkers Union want USTR to use the USMCA Review to strengthen and expand the RRM. They want the parties to implement reforms that make it easier for petitioners to bring claims, harder for parties to use the panel process to delay relief, expand the sectors and labor violations covered, and improve transparency and accessibility. These groups have also asked USTR to ensure that Canada and Mexico do more to fully enforce the existing forced labor bans in each country, with the National Council of Textile Organizations suggesting that Canada and Mexico take “further steps to prohibit imports made with Uyghur forced labor” from China specifically.¹⁵ It is not yet known if any of these public suggestions may become priorities for USTR in the USMCA Review next year.

_{1 19 U.S.C. § 1677b(e)(3).}
_{2 See 19 C.F.R. § 351.416(g)(10); see also,}_{Regulations Improving and Strengthening the Enforcement of Trade Remedies Through the Administration of the Antidumping and Countervailing Laws}_{, 89 Fed. Reg. 20766, 20783-20789 (Mar. 25, 2024).}
₃_{Section 301 Investigation Report on Nicaragua’s Acts, Policies, and Practices Related to Labor Rights, Human Rights and Fundamental Freedoms, and the Rule of Law}_{, USTR, October 20, 2025.}
_{4 See ILAB’s “}_{List of Goods Produced by Child Labor or Forced Labor}_{” to access the various reports.}
₅_{Notice of Determination and Request for Comments Concerning Action Pursuant to Section 301: Nicaragua's Acts, Policies, and Practices Related to Labor Rights, Human Rights and Fundamental Freedoms, and the Rule of Law}_{, 90 FR 48511, 48511-48514 (Oct. 23, 2025).}
₆_{Executive Order 14326 of July 31, 2025}_{: Further Modifying the Reciprocal Tariff Rates, 90 FR 37963.}
₇_{Agreement Between the United States of America and Malaysia on Reciprocal Trade}_{, Article 2.9.}
₈_{Agreement Between the United States of America and the Kingdom of Cambodia on Reciprocal Trade}_{, Article 2.8.}
₉_{Joint Statement on Framework for United States-Indonesia Agreement on Reciprocal Trade}_{, July 22, 2025.}
₁₀_{USMCA Article 23.6}_.
_{11 Unlike the commitments to adopting forced labor import prohibitions, the Malaysia and Cambodia agreements do not include an equivalent to the USMCA RRM.}
_{12 Please see White & Case’s discussion of the 2026 USMCA review provided in}_{North America Prepares for 2026 USMCA Review and Potential Renegotiation}_{, November 14, 2024, and}_{Public consultations on the USMCA (T-MEC)}_{, September 19, 2025.}
₁₃_{Labor Caucus Calls for Stronger Labor Standards in USMCA Joint Review}_{, Congressional Labor Caucus, November 4, 2025.}
₁₄_{USW Labor Advisory Committee Comments on the Operation of the Agreement between the United States of America, the United Mexican States, and Canada}_{, October 29, 2025.}
₁₅_{NCTO Public Comments on the Operation of the Agreement Between the United States of America, the United Mexican States, and Canada}_{, November 3, 2025.}

We provide below a list of partners and senior attorneys within the Global International Trade Practice of White & Case. Please contact any of them with questions about this report or other trade issues.

Washington, DC: David Bond (Partner); Ryan Brady (Partner); Cristina Brayton-Lewis (Partner); Jay Campbell (Partner); Nicole Erb (Partner); Farhad Jalinous (Partner); David Lim (Partner); Gregory Spak (Partner)
Mexico: Francisco de Rosenzweig (Partner); Carlos Vejar (Local Partner)
Brussels: James Killick (Partner); Sara Nordin (Partner)
Geneva: Jasper Wauters (Partner); Charles Julien (Partner)
London: Chris Thomas (Counsel); Ed Pearson (Senior Associate)
Paris: Orion Berg (Partner)
Tokyo: William Moran (Partner)

_{White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.}

_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}