WASHINGTON, July 7 - Ministers and government representatives from several Latin American countries and U.S. steel industry voices used public testimony this week to press for exemptions from proposed U.S. tariffs intended to punish insufficient enforcement of bans on imports produced with forced labor.
Over three days of public hearings on the U.S. Trade Representative’s (USTR) proposal to levy tariffs of 10% to 12.5% on goods from 59 countries and the European Union, delegates from Mexico, Peru, Guatemala and Ecuador rejected assertions they are failing to police forced labor in supply chains. They argued their domestic laws and enforcement mechanisms are adequate and that blanket duties would be an unjust response.
"Mexico has made the fight against forced labor a serious priority,"Ernesto Acevedo Fernandez, an undersecretary in Mexico’s Economy Ministry, told the hearing, adding that an additional 10% tariff would penalize thousands of law-abiding Mexican companies.
USTR’s proposal contains a carve-out for goods from Mexico that meet requirements under the U.S.-Mexico-Canada Agreement (USMCA). But Acevedo also asserted in testimony that the proposed measures lack grounding in evidence, saying:
"The tariffs proposed by the USTR against Mexico are unjustified, since there is no evidence of imports made with forced labor entering the United States through Mexico,"Acevedo said.
The hearings form part of the Trump administration’s legal process to impose duties under Section 301 over alleged failures to restrict imports made with forced labor. USTR has framed the proposed measures as necessary to prevent unfair competition that harms U.S. workers.
Some critics of the proposal see the new duties as largely intended to replace a temporary 10% tariff imposed in February, which was put in place after the Supreme Court struck down broad global tariffs previously applied under an emergency law. Those temporary duties are scheduled to expire on July 24.
States' attorneys general signal resistance
A coalition of 22 state attorneys general from Democratic-led states submitted objections on Monday, characterizing the forced-labor tariff plan as "an attempt to paper over predetermined sweeping tariffs" and labeling it an abuse of Section 301 authority. Their letter to U.S. Trade Representative Jamieson Greer indicated the group may pursue a court challenge in response.
Peru seeks exemption on evidentiary grounds
Peru’s director of trade negotiations, Jose Luis Castillo Mezarina, urged that Peru be excluded from any tariffs, arguing that the evidentiary threshold required under Section 301 has not been met. In his testimony, he requested exemption on the grounds that no "concrete burden on U.S. commerce has been established" and that bilateral trade relations do not justify such a measure.
Separate Brazil hearing and political testimony
A separate but simultaneous hearing addressing a proposed 25% tariff on goods from Brazil, pursued under another unfair trade investigation, concluded on Tuesday. Testimony in that forum included remarks from Brazilian Senator Flavio Bolsonaro, who is planning a presidential bid in October.
Steelmakers press for pig iron exemption
At the forced-labor tariff hearing, steelmakers and related trade groups asked USTR to exempt imported pig iron - a raw material used by electric-arc-furnace steelmakers - from the proposed duties. They noted that pig iron is not sourced from domestic integrated blast-furnace producers such as U.S. Steel and Cleveland-Cliffs, and therefore would not be available from those suppliers.
Pig iron had been exempted from the prior 50% national-security steel tariffs imposed under Section 232, but if included in the new forced-labor duties it would add costs for companies that rely on it, such as Nucor and Steel Dynamics.
Brandon Farris, executive vice president of the Steel Manufacturers Association, warned about the combined effect of overlapping duties, saying:
"without exemptions, tariffs on imported pig iron from Brazil, a major supplier, could rise to 37.5% when combined with the proposed Brazil-specific tariffs, putting the majority of domestic steel production at a competitive disadvantage."
USTR officials are expected to review the testimony and public comments before issuing a final determination on the proposed tariffs and any potential exemptions.
Stakeholders from Latin American governments, state attorneys general and U.S. industrial trade groups used the formal comment period to press opposing legal, evidentiary and economic arguments that the USTR will weigh ahead of its final decision.