The US introduced new tariffs, replacing what was struck down by the Supreme Court

The Trump administration is putting in place a new global tax regime designed to replace a temporary 10 percent tax that expires Friday.

Replacement charges will apply to goods from Canada, the European Union and nearly 60 other countries.

However, Canadian exports that comply with the rules of origin in the Canada-US-Mexico Agreement will not be exempt. That means there is no change in the amount or scope of US President Donald Trump’s existing tariffs on Canadian products.

America’s reason for the new tax is that countries have failed to do enough to keep products made by workers forced out of their supply chains.

This follows an investigation by US trade representatives this spring into whether 59 countries and the European Union are effectively banning the importation of goods produced by forced laborers.

The investigation revealed that every US trading partner failed to meet the bar.

‘We don’t support sweatshops’

“We are not in favor of sweatshops, and we don’t want anyone else to be in favor of it,” US Trade Representative Jamieson Greer told CNN on Thursday afternoon, shortly after announcing the tariffs.

Mandatory labor is just the latest reason for the Trump administration’s changes to its tax regime. These changes were largely forced upon them by the legal system, due to limitations on the president’s power to impose taxes.

The new tariffs replace a temporary 10 percent tax imposed by Trump in February, shortly after the US Supreme Court struck down his first global tax regime.

That tax return was limited to a five-month period, so its July 24 expiration date was long overdue.

The Trump administration has been looking for new, legal ways to impose a broader tax since that Supreme Court loss ended what had been its “Plan A” for global taxes.

• Plan A includes the so-called Liberation Day tariffs imposed in many countries in early 2025, as well as 35 percent duties on Canadian products, based on Trump’s declaration that the smuggling of fentanyl across the northern border was a national emergency. The court ruled that the International Emergency Economic Powers Act did not give Trump the authority to impose those costs.

• Plan B was a 10 percent tariff, imposed under Section 122 of the US Trade Act, which says the president can impose temporary tariffs to address what it describes as “large and critical balance of payments deficits of the United States.” That tax is limited to a maximum of 150 days without congressional approval.

• Plan C involves new tariffs, imposed under Section 301 of the US Trade Act, which gives the president the power to set tariffs as relief from unfair trade practices.

The tariff rate is 10 percent on goods from Canada and 15 other US trading partners, including the European Union, the UK, Argentina, El Salvador, Bangladesh and Pakistan.

Another 44 countries – including Japan, Singapore, India, South Korea and Vietnam – face a 12.5 percent tax.

Canada has “one of the strongest systems in the world to prevent and deal with forced use,” Canada-US Trade Minister Dominic LeBlanc said Thursday.

“Canada shares the United States’ commitment to ensuring that forcibly produced goods do not enter our stores,” LeBlanc said in a statement. “We will continue to engage constructively with the United States on this issue, as well as other outstanding issues, in the coming weeks.”

The Carney government earlier this month formally disputed the US claim that Canada is allowing the importation of manufactured goods.

‘Tax policy excuses’

The Trump administration’s preparation for a new tax regime is “too simplistic to be taken seriously,” said Congressman Richard Neal of Massachusetts, the top Democrat on the US House Ways and Means Committee.

“Forced labor is a real and pervasive problem in our stores and requires stricter enforcement,” Neal said in a news release. “It must never be reduced to an excuse for a tax policy built on dubious legal opinions and personal grievances.”

The latest broad-based tariffs use a different section of US law that gives the president the power to impose tariffs on certain industrial sectors – such as steel, aluminum and automobiles – on the basis of US national security.

They also differ from the 50 percent tariff that Trump has threatened to impose on billions of dollars worth of Canadian goods, under an unprecedented section of the 1930 American Tariff Act.

Those tariffs, which are expected to go into effect on August 19, are based on the administration’s claims that Canada discriminates against US trade in the alcohol, dairy and auto sectors.