Trump’s Trade Office Says Canada Must ‘Do More’ as New Tariff Threat Moves to Public Hearings

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Washington’s latest trade warning has shifted from paperwork to a public stage, and Canada is once again near the centre of the fight. The U.S. Trade Representative is moving ahead with hearings on proposed tariffs tied to forced-labour enforcement, arguing that dozens of trading partners have not done enough to keep tainted goods out of their markets.

For Canada, the dispute lands at a tense moment. Ottawa already faces pressure over steel, aluminum, autos, lumber, dairy, procurement, digital policy, and the uncertain future of the North American trade pact. Now a narrow customs issue has become something larger: a test of whether Canada can satisfy Washington’s demand for tougher border enforcement without accepting another broad tariff hit.

Public Hearings Turn a Trade Warning Into a Test

The immediate flashpoint is a U.S. Section 301 process that has moved into its public-comment and hearing phase. USTR says it opened investigations into 60 economies over whether they impose and effectively enforce bans on imports made with forced labour. In the Federal Register notice, the agency said 54 economies failed to impose and enforce such bans, while six others, including Canada, failed to effectively enforce bans already on the books. That distinction matters because Canada is not being accused of having no law at all; it is being accused of weak execution.

The proposed penalty is also significant. USTR has floated additional duties of 10% for economies that already have a forced-labour import ban, have made commitments, or have a partial regime, while other economies could face 12.5%. Written comments were due July 6, and public hearings are scheduled for July 7 in Washington. For Canadian exporters, the hearing is not just a legal step. It is a public test of whether Ottawa’s recent reforms can convince U.S. officials that Canada is closing the enforcement gap quickly enough.

Why Canada Is in the Crosshairs

Canada’s problem is not that it ignored forced labour altogether. Ottawa amended its Customs Tariff in 2020 to prohibit imports of goods made wholly or partly by forced labour, a change tied to its obligations under the Canada-United States-Mexico Agreement. The Canada Border Services Agency is responsible for enforcing that prohibition at the border, supported by other federal partners. Canada later added a supply-chain reporting law that requires certain companies and federal institutions to disclose steps taken to reduce forced- and child-labour risks.

The U.S. complaint is that these rules have not translated into enough border action. USTR’s report says available information suggests Canadian authorities intercepted about 50 shipments on forced-labour suspicion between 2020 and 2026, with only two ultimately prohibited from entering. It contrasted that with U.S. Customs and Border Protection denying entry to thousands of shipments under the Uyghur Forced Labor Prevention Act in 2024 alone. A Canadian importer moving seafood, textiles, coffee, cocoa, or cotton through complex supply chains may now face a simple question from both governments: can every stage of production be traced and defended?

Ottawa’s New Bill Is a Direct Answer

Ottawa has already moved to strengthen its system. In June, the federal government introduced legislation designed to replace the existing Customs Tariff approach with a standalone forced-labour import framework. The proposed law would let the Minister of Foreign Affairs establish a list of high-risk goods, regions, entities, or individuals where there are reasonable grounds to suspect forced labour. Importers of flagged goods could then be required to provide enhanced supply-chain tracing information to customs authorities.

The shift is important because it moves Canada closer to a more proactive enforcement model. Under the proposed framework, certain high-risk goods could be deemed prohibited if mandatory information requirements are not met. That changes the practical burden for importers, especially companies that rely on multi-tier suppliers overseas. A retailer may know its finished product supplier, but not the mill, farm, vessel, processor, or subcontractor several layers down. The new approach signals that “we asked our supplier” may no longer be enough. Documentation, traceability, audit trails, and supplier mapping are becoming trade-survival tools.

The Fight Is About More Than Forced Labour

Forced labour is the formal issue, but the political backdrop is much wider. The U.S. has been pressing Canada on a long list of trade irritants, including dairy market access, Buy Canadian procurement preferences, provincial alcohol rules, digital services rules, seed and agricultural restrictions, intellectual property concerns, labour enforcement, Alberta’s electricity market, and pharmaceutical pricing. Some of these disputes have existed for years, but the current tariff-heavy environment has made each one feel more urgent.

This is why the phrase “Canada must do more” carries weight even when the legal file is narrow. Washington is using trade enforcement as leverage across several fronts, while Ottawa is trying to avoid looking as though it is negotiating under threat. For Canadian businesses, the result is uncertainty. A parts maker in Windsor, a food exporter in Manitoba, a lumber producer in British Columbia, or a customs broker in Mississauga may not see forced-labour enforcement as their core issue, yet all can be affected if tariffs broaden or if compliance checks slow shipments.

USMCA Uncertainty Makes the Pressure Heavier

The timing is especially sensitive because the U.S. has declined to renew the USMCA in its current form, keeping the pact in place but pushing it into annual reviews before its possible expiration in 2036. USTR Jamieson Greer said Washington would keep working with Canada and Mexico to address shortcomings and trade deficits. That means the forced-labour dispute is unfolding inside a larger renegotiation atmosphere, where every unresolved complaint can become bargaining material.

The stakes are large because North American trade is deeply integrated. USTR data show U.S. goods trade with Canada totalled hundreds of billions of dollars in 2025, while Statistics Canada reported that more than 70% of Canadian merchandise exports still went to the United States that year. Even modest tariff changes can ripple through suppliers, retailers, consumers, and border communities. A Canadian-made product may cross the border multiple times before it becomes a finished good. When duties are added at one stage, the cost can move quietly through invoices until it reaches a dealership, grocery shelf, construction site, or household budget.

Businesses Now Face a Compliance Moment

For Canadian importers and exporters, this fight is no longer abstract. The U.S. notice asks for comments on which products should face duties, whether exclusions are appropriate, how high tariffs should be, and whether different rates should apply depending on a country’s enforcement commitments. That gives industry a chance to argue that certain goods are essential inputs, that tariffs could cause supply disruptions, or that Canada’s new framework should be credited before penalties are imposed.

Still, the direction of travel is clear. Companies dealing in higher-risk sectors will need stronger evidence about where goods and inputs come from. Apparel, seafood, agricultural products, critical minerals, solar components, and other complex supply-chain goods are likely to face more scrutiny. The practical work can be tedious: supplier declarations, purchase orders, production records, shipping documents, facility audits, and origin tracing. But in a world where customs decisions can become trade-war triggers, compliance is becoming a competitive advantage. Firms that can document clean supply chains may find themselves better protected than rivals that rely on vague assurances.

Canada’s Challenge Is Legal, Political, and Reputational

Ottawa’s response has to satisfy more than one audience. U.S. officials want proof that Canada’s border enforcement is real, not just written into law. Canadian businesses want rules that are clear enough to follow without paralyzing ordinary trade. Human-rights advocates want a system that actually stops goods linked to exploitation. At the same time, Canadian political leaders do not want to appear as though domestic law is being rewritten solely because Washington threatened tariffs.

That balancing act is difficult because forced-labour enforcement sits at the intersection of ethics and economics. The International Labour Organization estimates that tens of millions of people are trapped in forced labour worldwide and that forced labour generates hundreds of billions of dollars in illegal profits annually. Those figures explain why governments are tightening rules. Yet tariffs are a blunt tool. They can punish exporters and consumers without necessarily helping exploited workers unless paired with traceability, investigations, customs capacity, and international coordination.

What Happens Next

The public hearings will help determine whether the U.S. modifies, narrows, delays, or proceeds with the proposed tariffs. USTR has said it will consider comments on product coverage, tariff levels, exclusions, and the potential economic consequences of duties on key inputs. That creates a window for Canadian officials, industry groups, labour advocates, and importers to argue that Ottawa’s new bill should be treated as meaningful progress rather than an admission that punishment is needed.

Canada’s best argument is that it already has a legal ban, has acknowledged enforcement gaps, and is now proposing a stronger framework with high-risk lists, importer tracing duties, better information-sharing, and cost recovery. Washington’s counterargument is that commitments and reforms do not matter unless they produce measurable enforcement. The result is a familiar Canada-U.S. trade standoff: one side asking for time to implement, the other demanding proof now. For exporters, the safest assumption is that the border is becoming more documentation-heavy, and that tariff threats are likely to remain part of the negotiation playbook.

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