Shipping containers at the Port of Montreal last year.Carlos Osorio/Reuters
The United States says in a new report that Canada is failing to stop foreign goods made with forced labour from entering its market, a finding that coincides with Washington’s formal probe into the matter, which could lead to more tariffs on Canadian products.
The 2026 National Trade Estimate Report on Foreign Trade Barriers from the U.S. government says it appears Canada is importing goods that cost less than they should because they were made with forced labour.
It’s an early indication of how the U.S. will rule on Canada as it pursues investigations of 60 countries under Section 301 (b) of the Trade Act, probes that could result in the U.S. imposing tariffs of as much as 25 per cent on goods from countries that it deems to be falling short, analysts say. These probes were announced in mid-March.
U.S. begins forced-labour investigation into 60 countries, including Canada
Doug Ford takes anti-tariff message to Texas as opposition cries foul
William Pellerin, a partner with McMillan LLP’s international trade group, said the U.S. wants to force countries including Canada to adopt a tougher line against imports from countries such as China and could impose punitive levies until Ottawa complies.
U.S. customs policy operates on what is called “reverse onus.” It treats all goods from China’s Xinjiang region as though they were made with forced labour unless importers can provide “clear and convincing evidence” to the contrary.
“They could impose high tariffs until Canada adopts the same type of reverse-onus legislation and follows what the United States is doing,” Mr. Pellerin said of the U.S. government.
Canada pledged to the U.S. that it would ban imports of products made with forced labour as part of negotiations that led to the United States-Mexico-Canada Agreement, signed in 2018.
Ottawa amended the Customs Tariff Act on July 1, 2020, to prohibit forced-labour imports in keeping with its pledge made under the USMCA.
It also passed a law, the Fighting Against Forced Labour and Child Labour in Supply Chains Act, that came into effect in 2024 and requires government and businesses to annually report on steps they have taken to identify forced labour in their supply chains.
However, the Office of the United States Trade Representative told President Donald Trump and Congress in the trade barrier report, released late Tuesday, that Canada’s measures are not working.
Canada and Mexico on different paths heading into USMCA crunch time
“It does not appear that Canada is effectively enforcing its forced labor import prohibition, meaning goods made with forced labor may be able to enter and compete in Canada’s market,” the report says. “This issue may artificially suppress costs, including labor costs, which may give certain goods from and within Canada an unfair advantage.”
This conclusion contradicts Prime Minister Mark Carney’s recent assurances that Canada has a robust system to stop imports made with forced labour in countries such as China.
“Canada has a comprehensive legal framework around that. We take it very seriously,” Mr. Carney told reporters on March 13 after the U.S. Section 301 investigations were announced.
“There are strong provisions in Canadian law against forced labour,” he said, adding “we expect those to be followed and when they’re not, they are prosecuted.”
The Prime Minister has also said businesses have a role in ensuring their supply chains are free of forced labour.
Opinion: Why Canada must go global – to China and beyond
Canada has seized few imports made with forced labour.
The Canada Border Services Agency said Wednesday that since 2021 it has detained multiple shipments because of concerns that the goods might be products of forced labour. Of these, two were ultimately blocked from entering Canada after CBSA determined that they were produced with forced labour: a shipment of textile products in 2024 and a shipment of frozen seafood in 2025. Both were from China.
Mr. Trump and his team have made clear that they’re seeking to replace the hundreds of billions of dollars in lost tariff revenues after the Supreme Court’s February ruling – which deemed invalid the President’s attempt to use an emergency-powers law to enact tariffs – by using different laws to establish new levies.
Conservative foreign affairs critic Michael Chong said regardless of the Trump administration’s motives, the threat is clear for Canada: More tariffs may be coming.
“It’s a serious issue with serious implications,” he said.
He said Canada’s failure to properly enforce obligations it made under international agreements could jeopardize future trade with the United States.
Mr. Chong noted that the former Biden administration was also concerned with Canada’s efforts to stop imports made with forced labour.
Conservative foreign affairs critic Michael Chong in Ottawa last month.Spencer Colby/The Canadian Press
Mr. Pellerin said he believes that these Section 301 probes are about steering U.S. trading partners to take a common approach to China.
The United States’ “rebuttable presumption” approach has created havoc in supply chains, with billions of dollars of shipments tied up at U.S. ports, because Xinjiang is a major global source of tomatoes, cotton and polysilicon, which is used to make solar panels, he said.
He said CBSA faces big challenges in proving an import was harvested or made by people who were coerced into doing their jobs.
“Canada does not have a strong record of enforcement on its ban on importing goods made of forced labour, but not for lack of trying,” he said.
“A solar panel or a T-shirt does not look any different if it was made from forced labour,” he said.
“Global supply chains, such as those for cotton or polysilicon, are inordinately complex and true and complete traceability is near impossible.”
John Boscariol, head of McCarthy Tétrault’s international trade and investment law group, said if the U.S. probe finds against Canada, it presents an opportunity for the Trump administration “to put pressure on and negotiate and ask the Canadians to demonstrate that they are improving their enforcement.”
It’s also an excuse, he said, “for the imposition of more tariffs against Canadian exports.”
Mr. Boscariol said he’s seen evidence that CBSA is stepping up its import enforcement efforts against forced labour, perhaps in anticipation of this.
He said he thinks it’s unlikely that Mr. Carney would adopt a “reverse-onus” approach that deems all imports from Xinjiang to be made with forced labour unless proven otherwise by the importer, given the Prime Minister’s efforts to build ties with Beijing.