The United States Trade Representative proposed a 12.5% tariff on Australian goods on 2 June. Australia sits in the higher tier with 45 other economies. A lower 10% rate covers 14 economies including the European Union. All 60 trading partners investigated are facing action.

The tariff isn't really about us. The target is China. Australia just got swept up because we keep buying from a regime the United States banned imports from years ago.

The China play behind the tariff

Trump went to Beijing in mid May with a delegation of America's biggest CEOs, including Nvidia's Jensen Huang. He came home with one Boeing order. No rare earths deal. No semiconductor deal. No trade breakthrough. Trump himself told Fox News that tariffs "didn't even come up" with Xi Jinping. A European Parliament member with Beijing contacts summed it up: "Trump hasn't achieved anything economically for himself."

Trump's next move... three weeks later, the USTR published the forced labour finding. The tariff hits 60 economies in two tiers. The 12.5% group is 46 economies including China, India, Japan, Israel, Russia adjacent Gulf states, and Australia. The 10% group is 14 economies including the European Union. They got the lower rate because they either have a forced labour import ban on the books or have committed to one through a trade deal with the US.

The structure tells you what Washington wants. Get off Chinese forced labour exposure or pay more to sell into the United States. Australia got the higher rate because Australia hasn't legislated the ban.

Why Australia copped it

Prime Minister Anthony Albanese called the proposal "unjustified" and inconsistent with the Australia US free trade agreement. He told the ABC that Australia has "robust, comprehensive and world leading legislation addressing forced labour and modern slavery." Treasurer Jim Chalmers ran the same line. Opposition leader Angus Taylor also opposed the tariff. Both major parties agree it's unfair. Neither has explained why we don't have an enforced import ban.

The 2018 Modern Slavery Act requires large businesses to lodge an annual statement on the risks of modern slavery in their supply chains. It carries no penalties for non compliance and no border mechanism for stopping goods made with forced labour. The 2023 statutory review of the Act, conducted under this Labor government, found "no hard evidence that the Modern Slavery Act in its early years has yet caused meaningful change for people living in conditions of modern slavery." The reviewer recommended penalties and a mandatory due diligence obligation. The government partially accepted the recommendations three years ago and hasn't legislated them.

NSW Anti slavery Commissioner James Cockayne, who isn't a Trump supporter, said this week that if the US is looking to penalise countries that haven't taken sufficient steps to prevent forced labour in global supply chains, "then Australia is indeed vulnerable." His call to the federal government was to strengthen the laws, including with mandatory due diligence.

Video: "Slavery is Not Over" featuring Professor Justine Nolan, via UNSW Sydney/YouTube. Professor Justine Nolan, Director of the Australian Human Rights Institute at UNSW Sydney, explaining the scale of modern slavery in global supply chains.

What we're actually buying from China

The most exposed product is solar panels. Around 80% of solar panels installed in Australia come from China. A significant share of the polysilicon used to make them is produced in Xinjiang, where the Chinese Communist Party runs what the US, the UK, the European Union and multiple parliaments have documented as forced labour transfer programs targeting the Uyghur Muslim population. Detention. Surveillance. Coerced labour in factories. Mass internment camps.

The US banned all Xinjiang imports in June 2022 under the Uyghur Forced Labor Prevention Act. Australia banned none of it. Same with cotton, tomatoes, and a long list of consumer goods sourced from the same supply chains. Albanese's government is currently arguing against a tariff for letting in goods made by the very forced labour the rest of the developed world has banned.

Pick your bloc

The tariff lands at a moment when Australia is being asked to pick a side, and the choice isn't a hard one.

China is currently the strategic partner of Russia, which invaded Ukraine in 2022 and uses North Korean forced labour on its construction sites in breach of UN Security Council resolutions. China is also the strategic partner of Iran, which the United States and Israel have been at war with since 28 February under Operation Epic Fury. Iran publicly executes women for protesting, kills children for political dissent and locks up journalists for reporting it. The Pentagon has confirmed the war has cost roughly 25 billion US dollars at a burn rate of around one billion US dollars a day.

That's the bloc. Forced organ harvesting findings by the China Tribunal in 2019. The 1989 Tiananmen Square massacre that Beijing still refuses to acknowledge. The Hong Kong national security law crackdown in 2020. The cultural destruction in Tibet. The forced repatriation of North Korean defectors to certain torture or execution. The Iranian regime hanging teenagers from cranes. Russian troops shooting civilians in Bucha.

The other bloc is the United States, the United Kingdom, the European Union, Japan, South Korea, Canada and the rest of the democratic world. Imperfect. Often annoying. Not running gulags.

Pauline Hanson has been clear on the choice for years. So has Donald Trump. So has Senator Barnaby Joyce, who joined One Nation in December. The Australian public made the same call in poll after poll on China. It's the political class still hedging.

Forced labour at home

Australia has its own forced labour problem, and that's part of why this tariff is awkward to argue against.

Walk Free's Global Slavery Index estimates that more than 41,000 people in Australia are living in conditions of modern slavery, including forced labour and forced marriage. The most common form of modern slavery reported to authorities here is forced marriage, including the marriage of children under 18. In the year to 30 June 2022, nearly half of the 84 forced marriage reports to the AFP involved children. Reports to the Australian Federal Police of human trafficking have nearly doubled in the past five years. Documented forced labour cases in Australia have come out of horticulture, the Pacific Australia Labour Mobility scheme, hospitality, cleaning, domestic work and the sex industry.

Most Australians would agree we shouldn't be importing slave labour goods. Banning them at the border isn't a Trump talking point, it's the obvious fix for a problem the government has had three years to address.

The agenda

This tariff exists in this form because of four things stacked on each other.

The Supreme Court struck down Trump's emergency tariffs on 20 February in Learning Resources v Trump. That blew a hole in his revenue plan. Section 301 tariffs survived that ruling and aren't capped or time limited.

The Iran war is costing roughly one billion US dollars a day in munitions and operations. His Beijing trip with the CEOs in mid May produced one Boeing order and nothing else.

Total US federal debt sat at 39.16 trillion US dollars as at 27 May, up from 36.22 trillion at the start of 2025. Annual deficits are running at roughly two trillion US dollars. Interest on the debt alone now costs more than one trillion US dollars a year, at about 2.88 billion US dollars every day.

Former Australian ambassador to the US Joe Hockey, on this new tariff, said this week that "America is running out of money and they need to get it from somewhere." Trump's own line after the Supreme Court ruling was that "we get one ruling, and we do it a different way." Section 301 is the different way. The forced labour framing is a clean way to apply pressure on China and everyone buying from China without confronting Beijing directly.

The fiscal reality at home

Australia isn't in a strong position to lecture anyone on trade or debt. Federal gross debt is approaching one trillion dollars for the first time and sits at 1.05 trillion in the 2026-27 budget, projected to hit 1.2 trillion by 2029-30. Total public sector debt across federal, state and local government hit 1.62 trillion in the year to 30 June 2025, a 13% jump in one year. The Parliamentary Budget Office is forecasting no return to surplus across the forward estimates and national net debt rising to 37.9% of GDP by 2028-29.

That's the country Albanese is defending against tariffs while refusing to legislate a forced labour import ban his own review told him to introduce three years ago.

Where this leaves us

The tariff is a proposal. Public comments close 6 July. Hearings begin 7 July. There's still time to act before it lands.

The simplest, cheapest, most defensible fix is the one Albanese keeps insisting isn't needed. Legislate the import ban. Penalties for non compliance. Mandatory due diligence. Pick the alliance that actually shares our values and stop pretending we can play both sides forever.

Trump's doing what he's been telling everyone he'd do. The question is whether Australia is finally going to do what it should've done years ago.

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