The Canadian government has informed the Trump administration that its new legislation aimed at combating forced labor in supply chains should exempt Canada from facing additional tariffs. In a formal submission to the United States Trade Representative’s office, Canada reiterated its commitment to collaborating with the U.S. to eliminate forced labor globally.
According to the government’s submission on Monday, Canada believes that its existing prohibition on forced labor, combined with enhanced supply chain transparency measures and newly introduced standalone import legislation targeting forced labor, should prevent the imposition of extra Section 301 duties on Canadian goods. Ottawa’s position was presented among over 1,500 written submissions from various nations and industry groups ahead of a three-day hearing in Washington regarding President Trump’s utilization of Section 301 to impose tariffs.
U.S. Trade Representative Jamieson Greer proposed imposing 10% duties on Canada, Mexico, the United Kingdom, and other countries for inadequate enforcement of forced labor bans. Additionally, he suggested a 12.5% duty on numerous countries with partial or no bans on forced labor in their supply chains.
Canada already has legislation in place to address forced labor in supply chains, requiring annual reports to the federal government. However, a recent bill, C-35, aims to strengthen enforcement by establishing a public list of products associated with forced labor in specific regions and demanding importers to verify that products from listed regions are not produced through slavery.
In separate submissions to the U.S. trade office, Canadian business and industry groups argued for alternative strategies to combat forced labor, emphasizing the integrated nature of the North American market. They urged the USTR to evaluate Canada separately, suspend proposed tariffs until enforcement reforms are implemented, and prioritize targeted bilateral enforcement cooperation over broad measures.
Trump’s imposition of a 10% worldwide tariff using Section 122 of the 1974 Trade Act in response to a Supreme Court ruling was considered temporary and set to expire by the end of July. While the Canada-U.S.-Mexico Agreement (CUSMA) has shielded Canada from some tariffs, the country still faces separate duties on key industries like steel, aluminum, automobiles, and cabinetry.
Various Canadian submissions to the U.S. trade office stressed the importance of maintaining CUSMA exemptions regardless of the investigation’s outcome. Concerns were raised about potential disruptions to agricultural trade and supply chains, emphasizing the negative impacts of broad-based tariffs on both sides of the border. The National Foreign Trade Council also advocated for extending CUSMA exemptions to future tariffs, highlighting the ineffectiveness of comprehensive tariffs in addressing forced labor issues in supply chains.