The Australian government has formally objected to the United States’ proposed 12.5% “forced labour tariff” on Australian goods, arguing that the measure lacks sufficient evidence and would violate the Australia-United States Free Trade Agreement (AUSFTA).
The Trump administration previously proposed imposing new tariffs on goods from several trading partners, including Australia, under the justification of combating forced labour and modern slavery in supply chains. The proposed tariffs would replace the 10% tariff measures introduced in February, which were later overturned by the US Supreme Court. Washington argues that many major trading partners have failed to effectively prevent forced labour in their supply chains, warranting new trade restrictions.
The Australian Embassy in Washington submitted a formal response this week to the Office of the United States Trade Representative (USTR), stating that the US allegations against Australia “lack a credible evidentiary basis.” Australia pointed out that it has consistently received the highest ranking in the US State Department’s annual Trafficking in Persons Report, reflecting its strong record in combating forced labour.
Australia also questioned the consistency of the proposed tariff standards, noting that the United Kingdom, which also has strong measures against forced labour, was only facing a proposed 10% tariff. Meanwhile, countries with lower human rights ratings than Australia, including Bangladesh, Cambodia, Malaysia, Pakistan and Indonesia, would also face only a 10% tariff.
The Australian government stressed that the two countries have maintained close economic ties for decades, including recent moves to ease restrictions on US beef imports and the signing of a critical minerals cooperation framework. Canberra argued that Australia should not be subject to additional tariff measures.
The USTR is currently seeking feedback from affected countries, and a final decision on whether to introduce the tariffs has yet to be made.
Commentary:
The dispute highlights that even close allies with a free trade agreement are not immune from changes in US domestic politics and trade policies. In recent years, US measures including steel and aluminium tariffs, critical minerals policies and the proposed “forced labour tariff” show that economic security is increasingly taking priority over traditional free trade principles.
For Australia, seeking diplomatic exemptions remains important, but strengthening supply chain transparency and corporate due diligence mechanisms will also be crucial to maintaining international confidence. At the same time, if the US wants to use human rights standards as a basis for global trade policies, it will need to establish a more transparent, consistent and objective assessment system. Otherwise, such measures risk being viewed as politically motivated and could weaken confidence in the global free trade system.