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The Supply Chain Filter: US Puts 60 Economies Under New Forced-Labour Tariffs

• By  Textile Excellence
• July 30, 2026

On 24 July, the US imposed new 10% or 12.5% tariffs on imports from 60 economies under Section 301 of the Trade Act of 1974. The reason? Forced labour. The US says these economies have failed to effectively prohibit imports made with forced labour.

Together, the 60 economies account for 99.4% of US imports.

The list includes major textile and apparel suppliers such as India, Bangladesh, China, Vietnam, Indonesia, Malaysia, Thailand and Cambodia, along with the EU, Japan and South Korea.

But there is a catch: not everyone gets the same tariff.

The basic Section 301 rate is 12.5%. Economies that already prohibit forced-labour imports, have committed to doing so through trade agreements, or have partial regimes covering certain goods qualify for 10%.

India, Bangladesh, Cambodia, Indonesia, Malaysia, Pakistan, Sri Lanka, Canada, Mexico and the UK fall into this group.

China, Vietnam, Thailand, Singapore, Brazil and Hong Kong face 12.5%, subject to product-specific provisions and exemptions.

For the EU, Japan, South Korea, Taiwan and some other economies, the Section 301 duty is applied differently. The 10% or 12.5% rate is effectively calculated net of the existing MFN rate, depending on the product.

There are also exemptions for products where tariffs could create domestic shortages, cause wider economic disruption, or where comparable products cannot be produced domestically or sourced elsewhere at reasonable prices.

Bangladesh gets an interesting advantage

For textiles, Bangladesh is a particularly important case.

The US plans to establish tariff-rate quotas for Bangladesh, Cambodia, Indonesia and Malaysia by 1 September 2026. The mechanism will run for three years and is designed to encourage sourcing inputs from suppliers considered less likely to involve forced labour.

Most importantly, specified volumes of apparel and textile imports can enter the US with zero Section 301 tariff, provided they meet the qualifying conditions.

That could become a significant sourcing advantage. A Bangladeshi garment may therefore face a very different effective tariff depending on whether it falls within the quota.

Traceability is becoming a competitive tool, not just a compliance exercise.

India gets 10%, but the pressure remains

India's 10% rate looks better than the 12.5% facing China and Vietnam. But India's exporters still have plenty to worry about.

Indian textile and apparel exports to the US are worth almost US$ 11 billion annually, making the market critical. Industry bodies have warned that the new duty could hurt India's competitiveness, particularly as Bangladesh, Cambodia, Indonesia and Malaysia gain access to the new quota mechanism.

The sourcing question is changing from “Who makes it cheapest?” to “Who can stay competitive after tariffs, prove traceability and deliver on time?”

China starts from a tougher base

China faces the 12.5% forced-labour-related rate, but that is only one part of its tariff burden. USTR said in February 2026 that existing Section 301 tariffs on Chinese products ranged from 7.5% to 100%, depending on the product.

So Chinese exporters cannot treat 12.5% as their total US tariff exposure. The final landed cost depends on product classification and other applicable duties.

And that helps explain China's push towards automation, higher-value textiles, domestic consumption and diversified export markets.

The new tariff reality

For textile exporters, the US tariff equation can now involve MFN duties, Section 301 and 232 duties, trade agreements, temporary surcharges, quotas, exemptions, origin rules and input requirements.

A garment can be competitive at the factory gate, and suddenly lose its edge at the US border.

The US is no longer simply taxing products. It is increasingly shaping where they are made, where their inputs come from and how global supply chains are organised.

For textile exporters, the US tariff equation can now involve MFN duties, Section 301 and 232 duties, trade agreements, temporary surcharges, quotas, exemptions, origin rules and input requirements. A garment can be competitive at the factory gate, and suddenly lose its edge at the US border. The US is no longer simply taxing products. It is increasingly shaping where they are made, where their inputs come from and how global supply chains are organised.