Trump Threatens New Tariffs Targeting 60 Trade Partner Nations

On June 3, 2026, the Office of the U.S. Trade Representative announced proposed tariffs on imports from 60 economies, invoking Section 301 of the Trade Act of 1974 [1]. The stated justification: these nations have failed to adequately prohibit the importation of goods produced with forced labor. The proposed rates — 10% for countries with partial forced-labor import bans, 12.5% for those with none — would apply to a broad swath of global trade, covering partners that include the European Union, China, Japan, South Korea, Brazil, and the United Kingdom [2][3].

The announcement arrives against a backdrop of legal setbacks for the administration's trade agenda, a manufacturing sector already shedding jobs, and trading partners that have shown a willingness to retaliate at scale. Public hearings on the proposal are scheduled for July 7 [4].

What's Being Proposed and Why

The USTR's investigation covers 60 economies and frames the tariffs as a response to unfair trade practices — specifically, the failure of trading partners to enforce bans on goods made with forced labor [1][3]. Economies that have either enacted or committed to a forced-labor import ban would face a 10% additional tariff; all others would face 12.5% [2].

Certain products are exempt: energy, rare earths, some metals, beef, coffee, certain fruits and vegetables, pharmaceuticals, organic chemicals, and aircraft parts [4]. The exemptions appear designed to avoid immediate spikes in consumer prices for food and fuel, as well as to protect semiconductor and defense supply chains.

The forced-labor rationale marks a shift from the administration's earlier tariff justifications, which focused on trade deficits, national security, and currency manipulation. The 2026 Trade Policy Agenda from USTR also targets foreign wage suppression, government subsidies, and currency misalignment as justifications for trade action [5].

The Legal Gauntlet: From IEEPA to Section 301

The June 2026 proposal is the administration's third attempt at constructing a legal framework for broad tariffs, after two prior authorities were struck down by courts.

IEEPA (struck down February 2026): The administration originally imposed "reciprocal tariffs" in April 2025 under the International Emergency Economic Powers Act. On February 20, 2026, the Supreme Court ruled 6–3 in Learning Resources, Inc. v. Trump that IEEPA does not authorize the president to impose tariffs [6][7]. The decision invalidated both the reciprocal tariffs and separate fentanyl-related tariffs on Canada and Mexico.

Section 122 (struck down May 2026): Following the IEEPA ruling, the administration pivoted to Section 122 of the Trade Act of 1974, imposing a 10% global tariff effective February 24, 2026. On May 7, 2026, the U.S. Court of International Trade ruled 2–1 that this too was unlawful, finding the administration failed to demonstrate the balance-of-payments deficit required by the statute [8][9]. The court warned that the government's broad interpretation would raise "serious constitutional concerns, including under the nondelegation doctrine" [8]. The Federal Circuit issued an administrative stay on May 12, and the appeal is pending [10].

Section 301 (current basis): The new proposal rests on Section 301, which authorizes the USTR to investigate and respond to unfair trade practices by foreign governments. Section 301 was the legal basis for the first-term tariffs on China in 2018–2019 and has withstood prior legal challenges. But trade law scholars note that applying it to 60 economies simultaneously — on grounds of forced labor rather than traditional trade barriers — is an untested expansion of the statute's scope [11].

Comparing the Tariff Rounds

The scale of the administration's trade actions has grown with each round.

During Trump's first term, Section 301 tariffs targeted primarily China, covering roughly $370 billion in imports by 2019 [12]. The April 2, 2025, "Liberation Day" tariffs imposed rates of 10–50% on dozens of countries under IEEPA, exceeding market expectations and triggering immediate market volatility [13]. The current Section 301 proposal covers 60 economies at rates of 10–12.5%.

The Tax Foundation estimates the cumulative tariff burden has risen steadily: from $41 billion in new tariff revenue in 2018 to a projected $98 billion in 2026 and $105 billion in 2027 [12].

Source: Tax Foundation

Data as of Jun 1, 2026CSV

The Peterson Institute for International Economics projects that the tariffs reduce U.S. GDP growth by 0.23 percentage points in 2025 and 0.62 percentage points in 2026 relative to baseline [14]. The Tax Foundation's longer-run estimate is a 0.8% reduction in GDP over the next decade, before accounting for foreign retaliation [12]. The Congressional Budget Office concluded that changes in trade policy since January 2025 would "temporarily raise the rate of inflation, reduce real investment, lower the level of real GDP, and reduce employment" [15].

No major economic institution — the CBO, Peterson Institute, Tax Foundation, or Yale Budget Lab — has published a model showing a net economic benefit to the United States from the tariff regime [12][14][15].

Revenue vs. Consumer Cost

The administration has framed tariffs as a revenue tool. The Tax Foundation projects $98 billion in new tariff revenue in 2026, amounting to roughly 0.31% of GDP [12]. But that headline figure obscures who pays. Tariffs are collected from U.S. importers, who pass costs downstream to businesses and consumers.

The Tax Foundation estimates the tariffs amount to an average tax increase of $1,500 per U.S. household in 2026 [12]. The CBO projects the price level will be 0.9% higher by 2026 due to tariff effects, while the Peterson Institute finds inflation running a full percentage point above baseline [14][15].

When negative economic effects are factored in — reduced investment, lower employment, slower growth — the Tax Foundation estimates that the revenue actually raised falls to $697 billion over the decade, well below the gross projection [12].

Jobs at Risk: Who Gets Hurt

More than 23 million Americans work in industries with significant exposure to tariff-driven cost increases, according to the Washington Center for Equitable Growth [16]. Manufacturing has borne the most visible impact.

Through 2025, U.S. manufacturing employment fell by 33,000 jobs, concentrated in durable goods — cars, appliances, and electronics [17]. Across all tariff-impacted industries, payrolls dropped by 90,100 after February 2025 [18]. The automotive sector announced nearly 5,000 job cuts in July 2025 alone, with Stellantis temporarily laying off 900 U.S. workers and 4,500 Canadian employees after the 25% tariff on imported vehicles and parts [17][18].

Computer and electronic product manufacturing faces particularly high exposure, importing more than 20% of its inputs and confronting an estimated 3.5% increase in total input costs under the current tariff regime [16].

Agriculture has also suffered. China's retaliatory tariffs led to lasting declines in U.S. soybean, pork, and specialty crop exports [19]. The effects are geographically concentrated in Midwestern congressional districts — Iowa, Illinois, Indiana — where farming and auto-parts manufacturing employ large shares of the workforce.

Source: FRED / Bureau of Labor Statistics

Data as of Apr 1, 2026CSV

The unemployment rate stood at 4.3% in April 2026, up from 4.2% a year earlier, after peaking at 4.5% in November 2025 [20].

Retaliation: $281 Billion in U.S. Exports at Risk

Trading partners have not absorbed the tariffs passively. As of September 2025, retaliatory tariffs — threatened and imposed — targeted $223 billion of U.S. exports based on 2024 values [14].

China has been the most aggressive retaliator. Beijing escalated tariffs on all $144 billion of U.S. exports in stages — from 34% in April 2025, to 84%, to 125% — before reducing them to 10% under a 90-day pause in May 2025 [21]. China imposed additional duties of 15% on agricultural products including chicken, wheat, corn, and cotton, and 10% on soybeans, sorghum, pork, beef, and seafood — covering more than 700 tariff lines [21].

The European Union prepared retaliation lists covering up to €72 billion ($77 billion) in U.S. goods, though these were suspended to keep negotiations alive [22]. The July 2025 Turnberry deal between von der Leyen and Trump resulted in a complex arrangement: zero EU tariffs on most U.S. industrial goods in exchange for the U.S. tripling tariffs to 15% on EU exports, along with EU investment commitments of $600 billion in the U.S. by 2028 [22].

Canada placed roughly $35 billion in U.S. exports on its target lists [14].

Source: Peterson Institute for International Economics

Data as of Jun 1, 2026CSV

At the WTO, China was first to request consultations in February 2025, followed by Canada and Brazil [23]. China argued the U.S. tariffs violate GATT Article I (most-favored-nation treatment) and Article II (tariff concessions) [23]. But the WTO's Appellate Body remains nonfunctional — the Trump administration has blocked member appointments since the first term — leaving no enforceable path to resolving disputes [24].

The Forced-Labor Justification: Strong for Some, Contested for Others

The forced-labor rationale has a factual basis for certain countries. The U.S. already enforces the Uyghur Forced Labor Prevention Act, which bans imports of goods produced in China's Xinjiang region. The International Labour Organization estimates 27.6 million people are in forced labor globally [3].

But applying a blanket tariff to 60 economies based on enforcement gaps raises questions. Many of the targeted nations — including EU member states, Japan, South Korea, and the UK — have their own forced-labor import restrictions, albeit with varying scope and enforcement [4]. The USTR's investigation places countries with partial bans in the same 10% tariff tier as those actively developing legislation, blurring distinctions in compliance effort.

On the broader trade-practice justifications cited across the administration's tariff rounds — currency manipulation, subsidies, non-tariff barriers — the evidence varies sharply by country. China faces credible allegations across all categories, including industrial subsidies estimated in the hundreds of billions of dollars annually and a history of currency intervention documented by the U.S. Treasury [5][25]. For allied nations like Germany, Japan, and South Korea, the case is considerably weaker. These countries run trade surpluses with the U.S. primarily because of comparative advantage in manufacturing, not government manipulation, according to mainstream trade economists [25].

The near-unanimous consensus among economists is that tariffs are self-defeating as a tool for correcting trade imbalances and that free trade and reduced barriers produce positive effects on growth and welfare [25].

Market Signals: What Investors Are Saying

The April 2025 "Liberation Day" tariffs produced sharp market reactions. The S&P 500 sold off immediately, the 10-year Treasury yield dropped from 4.2% to 3.9% before rebounding, and the dollar weakened from 104.2 to 103.2 on the dollar index — an unusual move, since the dollar typically strengthens during risk-off events as investors seek safety in U.S. assets [13][26].

The dollar's decline suggested that investors were pricing in reduced confidence in U.S. fiscal and trade policy, not just a growth scare. Treasury market volatility peaked between April 7 and April 9, 2025, prompting the New York Fed to flag liquidity concerns [26][27].

Source: FRED / Federal Reserve Board

Data as of Jun 2, 2026CSV

As of early June 2026, the 10-year Treasury yield stands at approximately 4.5%, roughly flat year-over-year, while the S&P 500 has recovered significantly and sits near 7,554 — up 26.5% over the past year [20][28].

Source: FRED / S&P Dow Jones Indices

Data as of Jun 3, 2026CSV

The recovery in equities reflects multiple factors beyond trade policy, including AI-driven corporate earnings growth and expectations of Federal Reserve rate cuts. But bond-market analysts have noted that the persistence of elevated yields despite slowing growth signals lingering concern about fiscal discipline and the inflationary effects of tariffs [27].

Industry Lobbying and the Track Record of Sector-Specific Tariffs

Domestic industries that benefit from tariff protection have actively supported the administration's agenda. The steel industry, in particular, has been a vocal proponent. In April 2026, the administration restructured Section 232 tariffs on steel, aluminum, and copper, raising rates to 50% on finished articles and 25% on derivative products [29].

The steel industry's political spending is modest by Washington standards — steel production PACs contributed approximately $1.2 million to federal candidates in the 2023–2024 cycle, according to OpenSecrets data [30]. Auto manufacturers' PACs contributed more, though much of the auto industry has actively lobbied against tariffs on imported parts that raise their production costs [31].

The empirical record on whether tariffs have preserved or grown employment in protected industries is mixed at best. Following the 2018 Section 232 steel tariffs, employment in iron and steel mills rose by roughly 1,000 to 3,200 jobs [32][33]. But a Federal Reserve Board study found that increased input costs from those same tariffs were associated with 0.6% fewer jobs across the broader manufacturing sector — approximately 75,000 lost positions by mid-2019 [33]. Steel-using industries — auto parts, appliances, construction — shed more jobs than steelmakers gained.

Even within the steel sector, technological change has muted the employment impact. New production methods allow steel companies to produce more output with fewer workers, meaning that even sustained demand increases may not translate into proportional hiring [32].

What Comes Next

The Section 301 investigation enters a public comment and hearing phase on July 7. If finalized, the tariffs would add another layer to an already complex system that includes surviving Section 232 tariffs on metals, the Section 122 global tariff (stayed pending appeal), and bilateral arrangements like the U.S.-EU Turnberry deal.

The administration is also seeking public comments on the scope of a new U.S.-China Board of Trade, agreed during a bilateral summit, which could lead to reduced tariff rates between the two countries [4]. Whether this signals a willingness to negotiate or merely a tactical pause remains unclear.

Courts continue to serve as the most active check on the administration's trade authority. With IEEPA invalidated, Section 122 struck down at the trial court level, and Section 301 now being stretched to cover 60 economies on forced-labor grounds, the legal architecture supporting the tariff agenda is narrower than at any point since the trade war began. The Federal Circuit's ruling on the Section 122 appeal — expected later in 2026 — could further constrain or restore executive tariff authority.

For U.S. businesses, workers, and consumers, the practical reality is a tariff regime that has raised prices, reduced manufacturing employment, and generated retaliatory barriers against American exports — with the economic costs falling disproportionately on lower- and middle-income households [12][15]. Whether the forced-labor rationale can sustain both legal scrutiny and political support across 60 trading partners will determine whether this latest round becomes permanent policy or another chapter in a rapidly shifting legal and economic landscape.