Canada is making its case to Washington that it deserves a pass on new punitive tariffs but the numbers tell a complicated story.
The Canadian government filed an official response with the U.S. Trade Representative on July 6, arguing there is “no basis” for slapping additional Section 301 duties on Canadian goods. Ottawa pointed to its existing ban on importing goods made with forced labour, along with freshly introduced legislation, as proof it is serious about policing its supply chains.
The stakes are real. The USTR, which launched its forced labour investigation in March covering 60 economies, found in early June that Canada was failing to effectively enforce its import prohibitions and proposed a 10 percent tariff on Canadian goods as a consequence. Fifty-four other countries with no prohibition at all face a steeper 12.5 percent levy.
Washington’s argument is straightforward: when trading partners allow forced labour goods to enter their markets unchecked, it creates unfair competition that ultimately harms American commerce and undercuts goods made under legitimate labour conditions.
Canada’s submission to the USTR leaned heavily on Bill C-35, tabled in June, which would give the Foreign Affairs Minister authority to designate a list of high-risk goods. Importers of those goods would then be required to disclose detailed supply chain information to customs authorities. The bill also proposes better information-sharing across federal departments to tighten enforcement.
Ottawa also signaled a willingness to work collaboratively with Washington, noting that “this is an area where Canada is willing to collaborate with the U.S. through intelligence sharing and enforcement channels.”
The Canadian Chamber of Commerce echoed that message in its own submission, urging the USTR to hold off on tariffs while Canada’s enforcement reforms take hold. Canada’s response was among more than 1,500 comments filed ahead of public hearings held from July 7 to 9.
The goodwill framing runs headlong into enforcement data that is difficult to spin. Figures from the Canada Border Services Agency show that between 2020 and July 9 of this year, only 51 shipments suspected of containing forced labour goods were flagged by customs. Of those, just two were actually denied entry both from China, containing seafood and textiles.
Six shipments of Chinese auto parts were intercepted and re-exported, but hundreds of other shipments were either permitted in, abandoned, or sent back without any formal prohibition. For a country arguing its safeguards are robust, those are thin results over a five-year stretch.
Perhaps the most politically charged dimension of this debate involves Chinese electric vehicles. A CBSA official told a parliamentary committee in mid-June that automobiles are on a watchlist of goods potentially linked to forced labour but stopped short of confirming whether Chinese EVs heading to Canada would make the formal high-risk list.
Foreign Affairs Minister Anita Anand, who will be responsible for populating that list once Bill C-35 passes, was pressed on the issue directly. Bloc Québécois MP Alexis Brunelle-Duceppe asked pointedly on June 16 whether she would commit to adding Chinese electric vehicles to the prohibited goods list, given evidence of forced labour in their supply chains.
Anand declined to commit. “In the fall, during the next parliamentary session, we’ll have a list,” she said.
That answer sat uncomfortably alongside another revelation: Canada quietly struck a deal with China in January allowing up to 278,989 Chinese EVs to enter the country at a preferential tariff rate.
U.S. Trade Representative Jamieson Greer made clear that Ottawa’s EV arrangement with Beijing has not gone unnoticed in Washington. Explaining in part why the U.S. chose not to renew the Canada-United States-Mexico Agreement on free trade, Greer told Global News on July 2 that he does not want Chinese cars and investment flowing through Canada and into American markets.
The comment underscores just how much the forced labour file has become tangled up in the broader friction over trade and economic security between the two neighbours. For Canada, the path forward likely requires more than a persuasive legal brief it may demand concrete enforcement actions and some uncomfortable decisions about which goods it is genuinely prepared to keep out.
