Australia Is Facing a New 12.5% US Tariff over Anti-Slavery Claims. Are They Actually Right?

Why It Matters

The tariff could increase costs for Australian exporters and pressure the government to strengthen enforcement of modern‑slavery laws, affecting supply‑chain risk management globally.

Key Takeaways

• US proposes 12.5% tariff on Australian exports over forced‑labour concerns
• Australia's Modern Slavery Act lacks enforcement, limiting its effectiveness
• EU's forced‑labour import ban offers a model for Australia
• Tariff threat could push stricter supply‑chain due‑diligence regulations

Pulse Analysis

The United States is leveraging Section 301 of the Trade Act to target countries it deems lax on forced‑labour enforcement. In a June 2026 report, the USTR identified 54 economies, including Australia, that have not legally prohibited imports of goods produced with forced labour, proposing a 12.5% tariff on their exports. The move follows earlier actions such as the Uyghur Forced Labor Prevention Act and reflects a broader strategy to use trade policy as a lever for human‑rights compliance. While the tariff proposal is still subject to public consultation, its mere existence signals heightened scrutiny for supply‑chain transparency across a range of sectors.

Australia’s response hinges on its Modern Slavery Act of 2018, which mandates reporting but lacks enforcement mechanisms. An independent 2023 review found no concrete evidence that the Act has reduced modern‑slavery conditions, and the country still faces an estimated 41,000 forced‑labour victims. By contrast, the European Union has enacted a forced‑labour import ban that blocks suspect goods at the border, a model Australia could adopt to demonstrate compliance and mitigate tariff risk. Strengthening the Act with penalties and a due‑diligence obligation, similar to emerging regulations in South Korea and Thailand, would align Australia with global ESG expectations.

For businesses, the potential 12.5% duty represents a material cost increase and a reputational risk if forced‑labour links are uncovered. Companies should accelerate supply‑chain audits, enhance traceability, and engage with suppliers to certify compliance with emerging import bans. Proactive steps not only reduce tariff exposure but also meet investor demands for robust ESG practices. As the U.S. tightens its trade enforcement, Australian exporters that embed rigorous human‑rights due diligence will be better positioned to maintain market access and avoid punitive measures.