U.S. Section 301 Forced Labour Findings: Implications for Canadian Trade and the Emerging Legislative Response

On June 2, 2026, the Office of the United States Trade Representative (USTR) released findings from investigations under section 301 of the Trade Act of 1974 targeting forced labour in global supply chains. Canada was among 60 jurisdictions subject to that investigation.

The findings — and new tariff measures proposed as a result — pose renewed trade risks for Canadian exporters and have accelerated momentum for reform of Canada’s forced labour regime.

On June 12, 2026, the Government of Canada introduced Bill C-35, An Act respecting the prohibition of the importation of goods produced by forced labour (Bill C-35). According to Global Affairs Canada, “[i]f adopted, the Act would reinforce Canada’s existing framework to prevent goods made with forced labour from entering the Canadian market.”

USTR Findings and Proposed Tariff Measures

The USTR concluded that Canada has not sufficiently enforced its existing measures addressing forced labour. This contrasts with most jurisdictions reviewed, which were found to lack such prohibitions altogether.

As a result, the USTR has proposed additional tariffs of 10% on imports from countries, including Canada, that maintain partial regimes but reportedly lack effective enforcement. Jurisdictions without any comparable prohibitions could face duties of up to 12.5%.

The proposal is widely seen as laying the groundwork for an alternative legal path for replacing the U.S. President’s “liberation day” tariffs struck down by the U.S. Supreme Court in February 2026. 

Consistent with recent U.S. trade actions, the proposed tariffs would not apply to goods that are certified as originating under the Canada–United States–Mexico Agreement (CUSMA). 

The proposal remains subject to consultation, with public comments invited until July 6, 2026, and hearings scheduled for July 7, 2026.

Canada’s Existing Framework

Canada introduced prohibitions on the importation of goods produced wholly or in part by forced labour through amendments to the Customs Tariff in 2020. While this aligns Canada formally with international commitments, the USTR’s findings focus on enforcement outcomes.

The USTR cited limited detention and few determinations that goods were in fact produced with forced labour. This critique persists despite Canada’s adoption of supply chain transparency legislation under the Fighting Against Forced Labour and Child Labour in Supply Chains Act (Act), which came into force in 2024. While that Act has increased transparency, it is not designed as a direct import control mechanism.

Canada’s Legislative Response: Bill C-35

Against this backdrop, the federal government introduced Bill C-35, which received first reading on June 12, 2026.

Bill C-35 would establish a standalone legislative framework replacing the current import prohibition under the Customs Tariff on goods made in whole or in part by forced labour. It proposes to strengthen Canada’s forced labour import ban by:

• Prohibiting the importation of goods produced wholly or in part by “forced labour” as defined in the ILO Forced Labour Convention, 1930 (there is no consideration of child labour or prison labour)
• Authorizing the Minister of Foreign Affairs to establish, by regulation, a list of goods in respect of which there are reasonable grounds to suspect they are produced wholly or in part by forced labour, identified by producer or region of origin
• Requiring importers of listed goods to provide prescribed information to the Canada Border Services Agency (CBSA) upon request, failing which the goods are deemed prohibited from importation
• Applying the Customs Act to administration and enforcement, including authority to detain goods for up to 90 days (or longer if prescribed). This means that a violation under Bill C-35 is a violation of the Customs Act
• Imposing joint and several liability on importers and owners for detention, storage and disposal costs

Key Takeaways

The United States’ proposal to use section 301 to impose tariffs on Canada and other trading partners has provided new impetus for a policy shift towards stronger import controls and enforcement tools with respect to forced labour. 

Much of the practical compliance burden under Bill C-35 will depend on details to be set out in regulations that have not yet been published, and it remains unclear how the new regime will interact with or affect existing reporting requirements under current legislation.

Businesses should consider proactively reviewing their supply chain mapping, due diligence processes and origin determinations in anticipation of stricter controls and higher compliance costs on supply chain segments, which carry a risk of forced labour. 

For more information, please contact the authors or any other member of our International Trade group.