US Section 301 Forced Labor Investigation: New Trade Compliance Risks for Vietnam Exporters

The United States has proposed new Section 301 tariffs on imports from Vietnam and other trading partners due to concerns about forced labor in their supply chains. Learn which industries may be affected and how businesses should prepare.

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The Office of the United States Trade Representative (USTR) has suggested implementing a new round of Section 301 tariffs on imports from 60 key trading partners, including Vietnam. This follows investigations into whether these countries have neglected to ban or properly enforce restrictions on goods made with forced labor.

If implemented, the proposed measures could impose additional tariffs on a wide range of exports to the US and place greater scrutiny on supply chain transparency, particularly in sectors already exposed to forced-labor compliance risks, such as solar manufacturing, textiles, and apparel.

See also: US Designates Vietnam a Priority Foreign Country on IP

What happened?

On June 2, 2026, USTR released the findings of 60 separate Section 301 investigations launched in March 2026. The investigations examined whether major US trading partners have adopted and effectively enforced measures preventing the importation of goods produced with forced labor.

According to USTR, the failure of trading partners to restrict forced labor-related imports creates an “unlevel playing field” for US workers and businesses by allowing products made with artificially lower labor costs to enter global supply chains.

Vietnam was included alongside economies such as China, India, Japan, South Korea, Thailand, Malaysia, the European Union, Canada, Mexico, and the United Kingdom.

Understanding Section 301

Section 301 of the US Trade Act of 1974 authorizes USTR to investigate foreign government acts, policies, or practices that are considered unreasonable, discriminatory, or burdensome to US commerce.

Where a violation is found, the US government may impose responsive measures, including additional tariffs or other trade restrictions. Section 301 has previously served as the legal basis for tariffs imposed on Chinese imports during the US-China trade dispute.

Why is Vietnam included?

The investigation focuses on whether countries maintain and effectively enforce restrictions on imports made with forced labor.

USTR argues that many economies, including Vietnam, either lack comprehensive prohibitions or do not effectively enforce existing measures against forced labor-linked imports. The agency concluded that these shortcomings may allow goods produced through forced labor to enter international supply chains and compete unfairly with U.S. products.

The determination does not accuse Vietnam of systematically using forced labor. Rather, it assesses Vietnam’s regulatory approach to preventing the importation of goods produced with forced labor from third countries.

What are the proposed measures following the investigation?

Proposed tariff measures

With the issuance of the Section 301 Investigation report, USTR has proposed two tariff tiers:

• 10 percent additional tariffs for economies that have adopted full or partial forced labor import prohibitions or have made commitments through trade negotiations; and
• 12.5 percent additional tariffs for economies that USTR believes have not adopted adequate forced labor import restrictions.

Based on the USTR findings, Vietnam falls within the group proposed for the higher 12.5 percent tariff rate. However, the measure remains a proposal and is currently subject to public consultation.

USTR is accepting public comments through July 6, 2026, with public hearings scheduled for July 7.

Proposed textile mechanism

The USTR has also proposed a special mechanism for textile and apparel imports.

Under this proposal, a designated volume of textile and apparel products could qualify for a reduced Section 301 tariff rate based on the importing country’s purchases of US-origin textile inputs, including cotton and man-made fibers.

The mechanism will be designed to incentivize trading partners to source more textile materials from the US while reducing reliance on supply chains that may involve forced labor risks.

What are the sectors facing heightened scrutiny?

Although the proposed tariffs would apply broadly, several industries are likely to face elevated compliance risks.

Solar manufacturing

The USTR determination highlights concerns that manufacturers in third countries have previously attempted to circumvent US trade remedies by performing limited processing before exporting products to the United States.

The report specifically references earlier findings involving solar cells and modules produced in Southeast Asia, including Vietnam, where manufacturers were found to have undertaken minor processing of Chinese-origin components prior to export. This issue has already attracted significant attention through previous anti-circumvention investigations.

Textiles and apparel

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Facilitating seamless market entry and global expansion

The textile and apparel sector remains a key focus of US forced labor enforcement due to the complexity of global cotton supply chains.

The USTR determination highlights concerns that cotton subject to the Uyghur Forced Labor Prevention Act (UFLPA) may enter the US market through intermediary manufacturers in third countries, including Vietnam. The report notes that limited supply chain visibility can make it difficult to trace the origin of cotton inputs used in finished apparel products.

For Vietnam-based exporters, the findings reinforce the growing importance of supply chain transparency, cotton traceability, and supplier due diligence.

Since a separate textile mechanism is under USTR consideration, businesses sourcing cotton, yarn, fabrics, and finished apparel should prepare for ongoing scrutiny of origin traceability and supplier due diligence.

What should businesses do now?

While the tariffs have not yet been finalized, manufacturers and exporters operating in Vietnam should begin reviewing their supply-chain compliance frameworks, particularly for products exported to the United States.

Priority actions include:

• Mapping upstream suppliers and raw material sources;
• Reviewing exposure to forced labor compliance requirements under US regulations, including UFLPA;
• Strengthening supplier due diligence and traceability documentation;
• Reviewing cross-border sourcing arrangements involving China and other high-risk jurisdictions;
• Assessing potential tariff exposure under alternative sourcing and manufacturing scenarios; and
• Monitoring the outcome of the USTR consultation process.

For multinational companies using Vietnam as an export platform, the latest Section 301 action highlights the growing convergence between trade policy and supply-chain compliance.

Even where products are manufactured in Vietnam, the ability to demonstrate transparent sourcing and traceable supply chains is becoming increasingly important for maintaining access to the US market.

See also: US Supreme Court Blocks Trump’s Tariffs: Implications for Vietnam–US Trade and Businesses

For international investors, Vietnam's different localities offer favorable conditions across almost every sector, particularly as the country shifts toward higher value-chain manufacturing, high-tech industries, and innovation. Taking a closer look at Vietnam's provinces and investment destinations before committing capital can provide a decisive competitive advantage. A tailored market study, dedicated location selection, or business matchmaking can uncover factors that are often hard to assess—such as special incentives, skilled labor availability, and tax breaks.

Huyen Do

Manager, Business Intelligence Vietnam

Talk to an expert at vietnam@dezshira.com

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