US Extends Tariff Baseline Amid Pushback from Global Trading Partners

The US government has extended a 10% tariff baseline on imports from most major trading partners, effective Friday. The move is aimed at preventing forced labor in supply chains and replaces 10% levies that lapsed at the same time.

The tariffs will apply to almost 60 countries and the European Union, with some exemptions for products such as automobiles, metals, and drugs. Goods from countries deemed to have adopted forced-labor restrictions, including Mexico, the UK, Canada, and India, will face a 10% tariff, while others will be subject to duties of 12.5%. The formula allows for some exemptions, such as for products that can't be produced in the US or where tariffs would cause economy-wide disruptions.

The move has been met with pushback from countries around the world, but none have signaled retaliation is imminent. Global equity markets have largely shrugged off the change, viewing it as a continuation of the status quo. However, trade lawyers and former officials have questioned the use of Section 301 of the Trade Act of 1974, calling it an overly broad application susceptible to fresh court challenges.

The forced-labor duties are Trump's broadest move toward restoring his protectionist tariff regime since earlier levies were struck down by the Supreme Court. The White House has telegraphed the move, releasing the outcome of its forced-labor investigation last month.