Egypt Assessed 12.5 Percent Under US Forced Labour Action Covering 60 Economies
The Office of the United States Trade Representative announced on 23 July 2026 a final action in its forced-labour investigations covering 60 economies that together account for 99.4 percent of US imports. The measure was taken under Sections 301(b) and 304(a) of the Trade Act of 1974 and took effect at 12:01 a.m. eastern time on 24 July 2026. US Customs and Border Protection guidance, issued as CSMS message 69326983, exempts goods loaded before that moment and entered before 12:01 a.m. eastern on 28 July.
The structure is a tier, not a flat rate, and the tiering is the substance of the measure. Seventeen economies that have adopted or committed to adopting a forced-labour import prohibition are charged an additional 10 percent: Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom. Every other covered economy is charged 12.5 percent. For five trading partners the charge is set net of existing most-favoured-nation duties, so that the combined figure caps at 10 percent for the European Union and Taiwan and at 12.5 percent for Japan, the Republic of Korea and Switzerland.
All six GCC states, Kuwait, Saudi Arabia, the United Arab Emirates, Qatar, Bahrain and Oman, sit in the 12.5 percent tier, as do Egypt and China. Jordan and the United Kingdom sit in the 10 percent tier. Germany and France are covered through the European Union entry. Egypt’s classification is explicit in the customs guidance: “Except for products described in headings 9903.05.85–9903.05.92, articles the product of Egypt will be assessed an additional ad valorem rate of duty of 12.5%.”
What the action finds, and what it does not
The measure is being read in places as a finding that the economies in the upper tier use forced labour. The government’s own documents do not say that, and the distinction is material for Egypt.
The act, policy or practice found actionable under Section 301(b) is, in the final-action notice’s own words, “the failure of various economies to each impose and effectively enforce a prohibition on the importation of goods produced wholly or in part with forced labor.” The finding is about a missing border-control statute, not about labour conditions inside the country. The June determination notice rests the theory on inaction explicitly, noting that Section 301 “recognizes inaction as a basis for finding unreasonable an act, policy, or practice.”
The tier split follows the same logic. The lower rate goes to an economy that “imposes a forced labor import prohibition, has committed to impose and enforce such a prohibition through an Agreement on Reciprocal Trade (ART), or has imposed a partial regime with the effect of preventing the importation of certain forced labor goods.” Every other covered economy is charged 12.5 percent. The USTR fact sheet states it without qualification: trading partners “that have failed to adopt a forced labor import prohibition will have a 12.5% tariff rate.”
The composition of the two tiers is the clearest evidence that the test is legislative rather than evidentiary. The United Kingdom and Canada sit in the lower tier. Japan, the Republic of Korea, Switzerland and the European Union sit in the upper one, alongside Egypt, China and all six GCC states. No plausible ranking of labour conditions produces that ordering. What produces it is whether a country has written the US import-ban model into its own statute book.
The definition in play is the American one. Section 307 of the Tariff Act of 1930 defines forced labour as “all work or service which is exacted from any person under menace of any penalty for its nonperformance and for which the worker does not offer himself voluntarily,” which USTR states aligns substantially with the ILO Forced Labour Convention, 1930 (No. 29). It is broad in reach, covering private-sector and supply-chain conditions and not only state-imposed labour; USTR cites the ILO estimate that 86 percent of forced labour occurs in the private economy. But breadth of definition is not what was applied here. USTR scored each economy’s legal regime against eight elements of an effective import prohibition, among them a statutory definition grounded in international law, a designated enforcement authority, a public entity list, a rebuttable presumption, clear evidentiary standards, a remediation requirement, an accessible reporting mechanism and public disclosure. That is a benchmark for legislation, not a test applied to workplaces.
The scope confirms the character of the measure. The investigations covered 60 economies from which, on USTR’s figure, 99.40 percent of US imports are shipped. A measure reaching virtually all of American trade is a baseline rather than a targeting exercise, and 12.5 percent is the default rate within it rather than a penalty assigned to a selected group.
The process was open and contested. USTR received over 1,600 written comments and held a three-day public hearing on 7, 8 and 9 July 2026, at which over 100 witnesses appeared, including representatives of the governments of investigated economies. Jordan’s Ministry of Industry, Trade and Supply appeared on the published hearing schedule; Jordan is in the lower tier.
Key terms of the action
| Metric | Figure |
|---|---|
| Announced | 23 July 2026, USTR |
| Effective | 12:01 a.m. eastern time, 24 July 2026 |
| In-transit grace period ends | 12:01 a.m. eastern time, 28 July 2026 |
| Legal authority | Sections 301(b) and 304(a), Trade Act of 1974 |
| Economies investigated | 60, equal to 99.4 percent of US imports |
| Lower tier | 10 percent, 17 economies |
| Upper tier | 12.5 percent, all remaining covered economies |
| Combined duty capped at 10 percent | European Union, Taiwan |
| Combined duty capped at 12.5 percent | Japan, Republic of Korea, Switzerland |
| Egypt classification | HTS 9903.05.36, additional 12.5 percent |
| Exemption headings | 9903.05.85 through 9903.05.92 |
| Measure that lapsed at the same instant | Proclamation 11012, 10 percent Section 122 surcharge, all countries |
Input figures are from the USTR final-action Federal Register notice of 23 July 2026, CBP message CSMS 69326983 of 23 July 2026, and Proclamation 11012 of 20 February 2026, published in the Federal Register on 25 February 2026. Neither the USTR notice nor the CBP message refers to the Section 122 surcharge; the relationship set out below is our own reading of two separate instruments.
Why the step-up is not a single number
A temporary 10 percent import surcharge under Section 122 of the Trade Act, imposed by Proclamation 11012 of 20 February 2026, took effect at 12:01 a.m. eastern standard time on 24 February 2026 and ran, in the proclamation’s own words, “for a period of 150 days” through 12:01 a.m. eastern daylight time on 24 July 2026. The handoff to the new charge is exact to the minute. Nothing in the government’s own documents connects the two, and we do not suggest the second was designed as a successor to the first.
The netting matters because the surcharge applied to every country, while the new action covers 60 economies. On our calculation, that produces four distinct outcomes on 24 July rather than one.
| Origin and product treatment | Change on 24 July, our calculation |
|---|---|
| Origin outside the 60 investigated economies | Minus 10 points. The surcharge lapsed with nothing replacing it |
| Lower-tier economy, goods covered by both instruments | No change. 10 percent replaced by 10 percent |
| Upper-tier economy, goods covered by both instruments | Plus 2.5 points |
| Upper-tier economy, goods excluded from the surcharge but covered by the new action | Plus 12.5 points. From zero to the full rate |
The last row is the one most coverage has missed, and it is the one that matters most to Egypt. Proclamation 11012 excluded thirteen categories of goods, among them certain critical minerals, metals used in currency and bullion, energy and energy products, natural resources and fertilisers that cannot be produced domestically in sufficient quantity, and certain agricultural products including beef, tomatoes and oranges. The new action’s exemption headings, 9903.05.85 through 9903.05.92, cover a different set: in-transit goods, civil aircraft and engines, pharmaceutical applications, articles of aluminium, steel and copper, passenger vehicles and light and heavy trucks and their parts, wood products, semiconductor articles, humanitarian donations and informational materials, plus USMCA and CAFTA-DR carve-outs.
Energy products and fertilisers appear on the first list and not the second. For Egyptian goods in those categories the charge moves from zero to 12.5 percent, a full twelve-and-a-half-point increase rather than two and a half. Goods on both lists, among them pharmaceuticals, vehicles, aerospace, Section 232 articles and informational materials, remain at zero and are unaffected.
There is a further reason to state the rate carefully. On 7 May 2026 the United States Court of International Trade held Proclamation 11012 to be beyond the President’s authority under Section 122, in State of Oregon v. United States and Burlap and Barrel v. United States, Slip Opinion 26-47. The relief granted extended to three named importer plaintiffs only. The Court of Appeals for the Federal Circuit entered an administrative stay on 12 May, before the injunction took operative effect, and granted a stay pending appeal on 11 June. The surcharge was therefore collected continuously from 24 February to 24 July, from all origins, and the arithmetic above holds, but the appeal is undecided, and any eventual outcome would bear on refunds rather than on the rate now in force.
The numbers behind the cost to Egypt
US Census Bureau data for calendar year 2025 put US imports from Egypt at 2,851.8 million dollars against US exports to Egypt of 9,477.8 million dollars, a US surplus of 6,626.0 million dollars. For the first quarter of 2026, the latest period published, US imports from Egypt were 738.5 million dollars, against 659.4 million in the same quarter of 2025, an increase of 12.0 percent on our calculation. Egyptian shipments were expanding before the measure took effect.
Applying the tariff arithmetic to the 2025 base, the 2.5-point net increase is worth roughly 71 million dollars a year on goods covered by both instruments, while the full 12.5 percent charge would be worth roughly 357 million dollars a year, on our calculation. Both are illustrations of scale, not forecasts of collections: the bilateral total mixes tariff lines with different treatment, and the product-level annexes to the Section 301 action were not available to us.
CAPMAS, in figures released on 6 July 2026, put Egypt’s exports to the United States at 2.7 billion dollars in 2025, up 19.9 percent on the year and equal to 5.2 percent of Egypt’s total exports. On that basis a 2.5-point increase is equivalent to about 0.13 percent of Egypt’s total export value, or roughly 13 basis points, on our calculation. That is a small macroeconomic number.
The concentration is not small. CAPMAS puts ready-made garments at 1.3 billion dollars, or 48.7 percent of Egypt’s US-bound exports, up 11.4 percent on the year. Nearly half of Egypt’s exposure sits in one category. On our calculation the 2.5-point increase applied to garments alone is worth about 33 million dollars a year and the full 12.5 percent charge about 163 million. Garments appear on neither exclusion list, so the 2.5-point figure is the applicable one there.
A note on series: CAPMAS puts Egypt’s imports from the United States at 13.0 billion dollars for 2025 while the US Census Bureau puts US exports to Egypt at 9.48 billion. The two use different valuation and coverage bases and should not be blended.
The exemption question
Egyptian business representatives have publicly characterised the measure as carrying no effect on Egyptian exports, on the argument that Qualifying Industrial Zone goods are exempt and that duties cannot be applied twice. The customs guidance does not support the first half of that reasoning. CBP assigns Egypt to HTS 9903.05.36 and enumerates a closed list of exemption headings; Qualifying Industrial Zone goods enter duty-free through a separate bilateral mechanism under General Note 3(a)(v), which does not appear among them. Section 301 duties are additive to ordinary customs duty by design, so preferential ordinary-duty treatment and an additional trade-remedy duty can coexist. This is a different proposition from saying the arrangement has ended; it has not.
There is precedent. In April 2025, after a 10 percent tariff was applied, the Head of Egypt’s Commercial Service at the Ministry of Investment and Foreign Trade stated publicly that Egypt’s Qualifying Industrial Zone exports were subject to that tariff, and Egypt subsequently sought to amend the protocol. That is the conduct of a government that understood the arrangement did not shield it.
The conclusion that the macroeconomic impact is limited is nonetheless defensible, on different grounds. The United States takes 5.2 percent of Egypt’s exports, and a 2.5-point increase on that share is a 13-basis-point effect on total export value. The right answer is reached through the trade weights, not through the exemption argument.
Egypt’s position on forced labour
Because the tier is not a judgement on Egyptian labour standards, Egypt’s own legal position sits outside the tariff arithmetic. It is worth setting out, since the two are routinely conflated.
Forced labour is prohibited at constitutional level. Article 12 of the 2014 Constitution provides that there can be no forced labour “except in accordance with the law and for the purpose of performing a public service for a defined period of time and in return for a fair wage, without prejudice to the basic rights of those assigned to the work.” Article 89 prohibits slavery, all forms of oppression and forced exploitation of human beings, and human trafficking, and makes them punishable by law.
At treaty level Egypt has ratified the full set of core instruments in this family, all of them in force. The Forced Labour Convention, 1930 (No. 29) was ratified on 29 November 1955 and the Abolition of Forced Labour Convention, 1957 (No. 105) on 23 October 1958. The Minimum Age Convention, 1973 (No. 138) followed on 9 June 1999, with the minimum age specified at 15, and the Worst Forms of Child Labour Convention, 1999 (No. 182) on 6 May 2002. Egypt has ratified 8 of the 10 fundamental conventions, and on the enforcement side the Labour Inspection Convention, 1947 (No. 81) in October 1956 and its agricultural counterpart (No. 129) in June 2003. The 2014 Protocol to Convention No. 29 does not appear among Egypt’s ratifications and is the one instrument in this group outstanding.
In domestic law, Law No. 64 of 2010 on Combating Human Trafficking entered into force on 10 May 2010 and is classified in the ILO’s legislative database under the elimination of forced labour. Institutional machinery followed. The National Coordinating Committee for Combating and Preventing Illegal Migration and Trafficking in Persons was established under Law No. 82 of 2016 and constituted by Prime Minister Decree No. 192 of 2017, drawing 30 members from across the ministries and reporting directly to the Prime Minister. The labour code itself was replaced last year: Labour Law No. 14 of 2025 was adopted on 3 May 2025 and took effect on 1 September 2025, repealing Law No. 12 of 2003.
Cooperation with the ILO is current rather than historic. The THAMM Plus programme, funded by the European Union at 5.375 million dollars and running from 1 November 2023 to 31 October 2027 across Egypt, Morocco and Tunisia, includes an Egyptian workstream with the Ministry of Labour on fair recruitment and the prevention of forced labour.
What Egypt does not appear to have is the one instrument the tariff actually turns on: a domestic statute prohibiting the importation into Egypt of goods produced with forced labour elsewhere. That is a border-control measure rather than a labour standard, and most of the world lacks it, which is why the upper tier is so crowded. We were unable to verify a formal Egyptian government response to the action at an approved source as at the time of writing.
Why it matters: For Gulf exporters the exposure sits in non-hydrocarbon trade, in aluminium, petrochemicals, fertilisers and manufactured goods, and the relevant question is not the absolute rate but the competitive position against the 17 economies in the lower tier, a gap of 2.5 points on otherwise comparable products. Hydrocarbon flows to the United States are a small and declining share of GCC export revenue, which limits the headline exposure considerably. The exclusion asymmetry deserves particular attention in the Gulf, because fertilisers and energy products, categories the region exports in volume, were shielded by the lapsed surcharge and are not shielded by the new one. The wider significance is structural: the action ties tariff treatment to the adoption of a specific regulatory standard, and the 17 economies in the lower tier earned their position by adopting or committing to it. That converts a trade measure into a regulatory-convergence incentive, and the mechanism, more than the rate, is what merits attention.
Outlook: Five things to watch. First, whether any covered economy moves into the lower tier by adopting the standard, which the structure explicitly invites. Second, publication of the Section 301 product annexes, without which no exporter can price its exposure at the tariff-line level. Third, whether Egypt reopens the Qualifying Industrial Zone protocol as it did in 2025, given that nearly half its US-bound exports sit in the affected category. Fourth, the Federal Circuit appeal on the Section 122 surcharge, which cannot change the rate now in force but could determine whether five months of collections are refunded. Fifth, whether Egypt legislates an import prohibition of its own, which on the published criteria is the only route from the 12.5 percent tier to the 10 percent one.
Sources: Office of the United States Trade Representative, final-action notice and fact sheet, 23 July 2026; US Customs and Border Protection CSMS messages; Proclamation 11012; US Court of International Trade, Slip Opinions 26-47 and 26-53; US Census Bureau; CAPMAS; International Labour Organization NORMLEX ratification record and NATLEX legislative database; Constitution of the Arab Republic of Egypt 2014; Egyptian National Coordinating Committee for Combating and Preventing Illegal Migration and Trafficking in Persons. Derived calculations are our own.
