Donald Trump and the U.S. government announced today a 12.5% tariff will be applied to imports from a number of countries across the world – including Australia – because those countries don’t have strict legislation around forced labour prohibition.
There were some countries that were exempted and only hit with a 10% tariff - Canada, the U.K. and the EU. Why did these 3 get a free pass? Because all have legislation in place relating to the prohibition of goods made with forced labour (Canada – Customs Tarriff legislation, and the Fighting Against Forced Labour and Child Labour in Supply Chains Act; EU – EU Forced Labour Regulation, known as the Prohibiting Products Made with Forced Labour on the Union Market legislation). And the U.K.? It doesn’t have standalone legislation specifically – rather, it has the Modern Slavery Act 2015, which is a reporting and transparency regime, as well as a few import controls over specific goods.
So what about Australia? Is Australia okay with forced labour production? Of course not! But technically, Australia doesn’t have specific legislation around forced labour production, it DOES have the Modern Slavery Act 2018, which requires companies over $100 million to disclose if there is any forced labour in their supply chains. This is a self-directed declaration the companies make, so it’s not that strong or comprehensive.
The logical question then is, if both the U.K.and Australia only have ‘Modern Slavery Act’ legislation, why is Australia being punished further? The answer? It’s complicated.
The U.K. was placed in a third category (the first two categories being the country DOES have laws banning forced labour, or they don’t), which covers countries that have ‘imposed a partial regime with the effect of preventing the importation of certain forced labour goods’. According to the U.S., this is close enough to a full prohibition on forced labour, that they received an exemption.
Where to from here? It’s hard to know for sure, given how erratic the U.S. government has been in the area of international trade. The current administration is trying to restore US manufacturing and economic independence, and this is another step in that process. How successful they’ll be overall remains to be seen. In the meantime, foreign countries and businesses need to keep up to date with all these changes to ensure continued flow of product, and ongoing profitability.
