US trade crackdown on forced labour goods puts downward rate momentum at risk
The Trump administration has proposed new tariffs targeting up to 60 trading partners — including the UK — following a US trade office investigation into the enforcement of forced labour import prohibitions.
Under the proposals, 16 economies with partial forced labour bans or relevant trade agreement commitments, including the UK, Canada, and Mexico, face a 10% tariff. Nations with no meaningful restrictions, including China and India, face 12.5%.
The announcement criticised the UK for lacking a forced labour import prohibition, while acknowledging that the country had introduced modern slavery measures. A UK government spokesperson said the country was already tackling the issue domestically and in global supply chains.
The EU, Canada, Ecuador, Indonesia, Mexico, and Pakistan were among the other 53 nations identified as failing to effectively enforce forced-labour import bans.
The US is proposing tariffs of at least 10% on imports from most major trading partners following an investigation into goods allegedly produced by forced labor, as President Donald Trump seeks to rebuild the sweeping tariff wall struck down by the US Supreme Court. Read more:… pic.twitter.com/4FsbhkHLnt
— Bloomberg (@business) June 3, 2026
London markets reacted modestly, with the FTSE 100 down 0.2% in morning trading, also weighed by concerns over stalled US-Iran peace talks.
The proposals follow the US Supreme Court's February ruling that earlier White House tariffs, imposed under the Emergency Economic Powers Act, were unlawful.
The proposals carry implications for UK mortgage rates through their effect on inflation and Bank of England policy. A House of Lords Library report from April 2025 noted that tariffs raise prices for consumers and firms buying goods from abroad, fuelling inflation. If inflation rises, the Bank of England may slow or reverse its rate-cutting cycle.
The Bank of England's base rate is now at 3.75%, but developments in Washington could feed directly into global inflation expectations, the central bank's base rate path, and wholesale funding costs.
The effect is not one-directional. When earlier Trump tariffs spread through markets in April 2025, they led to lower global bond yields, which reduced the cost of borrowing for UK lenders and gave them the flexibility to offer more competitive rates.
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