Canada Faces Fresh Tariff Threat as U.S. Questions Forced Labour Enforcement
Canada could soon face a new round of tariffs from the United States after the Trump administration accused Ottawa of failing to adequately enforce laws designed to block imports linked to forced labour.
The issue comes at a sensitive time for North American trade relations, with the Canada-United States-Mexico Agreement (CUSMA/USMCA) approaching a scheduled review. U.S. officials argue that Canada has not lived up to commitments made during the last renegotiation of the trade pact, raising concerns that the dispute could become a major sticking point in future talks.
U.S. Raises Concerns Over Enforcement
The criticism stems from a report released by the Office of the United States Trade Representative (USTR), which examined how countries are enforcing restrictions on products connected to forced labour.
According to the report, Canada’s enforcement efforts have been limited since changes to its customs laws were introduced in 2020. The Trump administration argues that while Canada adopted new rules prohibiting the import of goods produced through forced labour, there has been little evidence of meaningful enforcement.
The report specifically claimed that the number of enforcement actions taken by Canadian authorities appears to be minimal and questioned the transparency of Canada’s efforts. U.S. officials also noted that the Canada Border Services Agency (CBSA) does not regularly publish detailed information regarding investigations or seizures related to forced labour imports.
Enforcement Numbers Under Scrutiny
The USTR report cited findings from the Coalition Against Forced Labour, which indicated that Canadian border officials had intercepted approximately 50 shipments suspected of involving forced labour since 2020.
However, only two shipments were ultimately denied entry into Canada after authorities determined they had been produced using forced labour. Those cases reportedly involved a textile shipment in 2024 and a seafood shipment in 2025.
Trade experts say those numbers have contributed to concerns that Canada’s enforcement system is not operating as aggressively as similar programs in the United States.
Martha Goncalves, National Leader for Customs and International Trade at PwC Canada, said the issue has been lingering for years and is now resurfacing at a politically significant moment.
She argued that Canada’s slow implementation and enforcement of forced labour provisions weakened its position ahead of upcoming USMCA discussions.
Critics See Tariffs as a Negotiating Tool
Not everyone believes forced labour concerns are the primary motivation behind Washington’s actions.
Former Liberal MP John McKay suggested the issue is being used as leverage in broader trade negotiations. He argued that the United States itself faces criticism regarding labour practices and enforcement measures, making the latest accusations appear politically motivated.
According to McKay, the tariff threat is less about labour standards and more about creating bargaining power before trade talks begin.
The Trump administration launched investigations into forced labour practices under Section 301 of the Trade Act of 1974 earlier this year as part of a broader effort to support its trade and tariff agenda.
Canada Accused of Weak Follow-Through
In 2023, Canada passed legislation requiring companies to disclose efforts to prevent forced labour and child labour within their supply chains. Businesses must now submit annual reports outlining the measures they have taken to identify and reduce these risks.
Despite the legislation, critics argue that enforcement has been lacking.
While the federal government has the authority to investigate companies and impose penalties, it has yet to issue significant fines or aggressively pursue non-compliant businesses.
McKay said Canada has established a strong legal framework but has failed to fully utilize the tools available to ensure compliance.
He also noted that after multiple reporting cycles, there has been little public analysis of the law’s effectiveness.
Political Leaders Respond
Prime Minister Mark Carney acknowledged the U.S. concerns, saying the latest report did not come as a surprise because Washington had been publicly discussing the issue for months.
Carney announced that the federal government intends to introduce additional measures aimed at strengthening Canada’s response to forced labour and child labour concerns.
“We don’t want any element of forced labour coming in,” Carney told reporters, emphasizing Canada’s commitment to eliminating such practices from supply chains.
Meanwhile, Conservative MP Adam Chambers said the government’s enforcement record has been disappointing and that the gap between official promises and actual results has become increasingly apparent.
What Happens Next?
Although tariffs are not guaranteed, the USTR report could serve as the foundation for future trade actions targeting specific industries.
Experts suggest sectors such as seafood, coffee, cotton, and textiles could face heightened scrutiny because forced labour concerns have historically been linked to portions of those supply chains.
Businesses that rely on imports are being advised to strengthen documentation regarding sourcing practices and prepare for more detailed requests from customs officials.
For now, any new tariffs would require additional consultations before being implemented. However, the dispute has already become another challenge in the increasingly complex trade relationship between Canada and the United States.
With USMCA review talks approaching, the debate over forced labour enforcement may soon become one of the most closely watched issues in North American trade policy.
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