USTR Initiates 60 Section 301 Investigations Relating to Failures to Take Action on Forced Labor

I) On July 23, 2026, the United States Trade Representative (USTR) launched Section 301 investigations into 60 economies for failing to impose and effectively enforce bans on importing goods made with forced labor. Forced labor—work performed under threat or coercion—has long been prohibited under U.S. law and widely condemned under international law, yet global forced labor persists and has increased, with the ILO estimating 28 million people in forced labor as of 2021.

– The U.S. argues that companies using forced labor gain unfair cost advantages, harming American workers and exporters. Ending forced labor is framed as an economic and national security priority.

– The investigations cover economies responsible for over 99% of U.S. imports. While some countries have adopted or committed to forced‑labor‑related measures, none appear to have fully implemented and enforced an import prohibition. The investigations will assess whether these practices burden U.S. commerce and what actions should follow.

– Under Section 301 of the Trade Act of 1974, the USTR can self‑initiate such investigations. Upon initiation, the USTR has requested consultations with all 60 governments. Public comments are invited until April 15, and a public hearing for each economy will begin on April 28.

II) Vietnam’s exports to the U.S. reached USD 86.48 billion in H1 2026, heavily concentrated in labor‑intensive or multi‑layer supply‑chain sectors such as electronics, machinery, textiles, phones, footwear, and wood products — the groups most exposed to the new forced‑labor Section 301 tariff package. Vietnam is placed in the 12.5% tier, alongside China, making the impact more direct. The actual effect will depend on exemption lists (including textile mechanisms) and U.S. import demand.

– The Vietnamese Government has reiterated its willingness to negotiate and urged the U.S. to conclude the investigation quickly to avoid trade disruptions. The previous 20% reciprocal tariff and all IEEPA‑based tariffs were struck down by the U.S. Supreme Court in February 2026. Both sides are negotiating a new trade agreement under which Vietnam would open nearly all U.S. goods at 0% tariffs.

– The earlier 10% general tariff was only temporary and expired on July 24 due to legal limits under Section 122 of the Trade Act of 1974. It has been replaced by the Section 301 forced‑labor tariff package (effective July 24), with 10% for economies that ban forced labor and 12.5% for others. The package covers ~99.4% of U.S. imports but excludes many categories (energy, fertilizers, certain foods, goods without U.S. production, steel, USMCA‑compliant goods) and includes a reduction mechanism for some textile items.

– From July 24, Vietnamese exports face a 12.5% tariff, up from 10%, increasing pressure on firms with high U.S. exposure. Since the 20% reciprocal tariff was removed, 12.5% is now the primary rate applied to Vietnam. Although the increase is modest, valuations of major export‑oriented stocks have already fallen to attractive levels (textiles and seafood at ~5–8x P/E, rubber tires like DRC ~12.5x).