US adds new forced-labour tariff on Chinese goods as trade architecture hardens

Australia is a mid-sized open economy tightly linked to Chinese demand for its exports and US-aligned on technology controls. A durable shift in US–China trade structure directly affects Australian commodity prices, superannuation funds and the broader economic outlook.

In a nutshell: On 23 July, the USTR imposed a further 12.5 percent Section 301 tariff on Chinese goods, citing failure to prohibit forced-labour imports, raising the overall tariff on Chinese goods by an additional 2.5 percentage points. These permanent Section 301 tariffs replace the IEEPA emergency tariffs struck down by the US Supreme Court in February. A 15 percent global tariff has been in effect since 24 February. McKinsey analysis finds US–China goods trade has fallen roughly 30 percent since the escalation cycle, with Chinese exporters cutting prices by an average of 8 percent to find alternative buyers. ASEAN economies have gained, but Australia faces Chinese exports being redirected into its market at discounted prices.