NCTO pushes for tougher forced-labor tariffs in USTR Section 301 investigation

The National Council of Textile Organizations (NCTO), a Washington, DC-based trade association that represents the full breadth of the US textile industry, has offered recommendations in the US Trade Representative’s (USTR) ongoing Section 301 investigations, calling for new tariffs on apparel imports from countries at risk of forced labour in their supply chains, while proposing three reforms to encourage the growth of the domestic industry.

NCTO advocates for domestic textile industry protection in USTR Section 301 Investigations

According to the NCTO, forced labor remains prevalent across international textile and apparel supply chains, putting US manufacturers at a "disadvantage." The organization argues that the administration now has the opportunity to "take meaningful actions in the investigations to revitalize the domestic textile industry" while protecting it from "predatory trade practices like forced labor."

At the same time, the NCTO warns that while the right approach "could potentially double industry capacity," the wrong one could "cost US jobs" and cause "irreparable harm." The tariff recommendations come ahead of NCTO president and CEO Kim Glas testifying at the USTR hearings on Section 301 forced labor investigations on July 9.

NCTO's recommendations come after USTR initiated 60 investigations into economies alleged to have failed to impose and effectively enforce a prohibition on the importation of goods produced with forced labor in March. After reviewing more than 450 written comments and hearing from nearly 60 witnesses, USTR found all 60 economies actionable and proposed tiered additional duties on June 2, including 10 percent for jurisdictions with forced-labor import prohibitions or commitments, and 12.5 percent for those without.

The USTR investigation is widely seen as the next step in replacing the administration's IEEPA tariffs. With a temporary 10 percent Section 122 surcharge set to expire on July 24, 2026, unless Congress extends it, USTR has an incentive to finalize the Section 301 duties before then. For countries that rely on garment production and export, including Bangladesh, Vietnam and India, the proposed duties would land hard on top of what has been a turbulent year to date, as the current tariff regime has already driven sharp export declines and led to tens of thousands of job losses across Bangladesh and India.

In addition to urging the USTR to impose Section 301 duties on apparel and finished textile products from China, the Global South, and Southeast Asian countries at risk of using forced labor in manufacturing, and to strengthen customs enforcement, NCTO is also calling on USTR to preserve duty-free treatment for textiles and apparel that meet the United States-Mexico-Canada Agreement (USMCA) and Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) requirements.

The organization is also urging necessary reforms within the USTR's proposed textile mechanism to support domestic growth. NCTO calls for three reforms within the textile mechanism proposed by USTR as part of its forced labor investigation. These include the exclusion of raw cotton from the mechanism, arguing that the cotton track rewards the offshoring of US yarn, fabric, and apparel production and ultimately benefits Asia. NCTO is also seeking an exemption from additional Section 301 tariffs for textile manufacturing inputs and machinery not available domestically, to protect US competitiveness. Lastly, the organization calls for the mechanism to be restructured to incentivize more Western Hemisphere sourcing, rewarding supply chains free of forced labor.

To aid these reforms, NCTO has partnered with the American Apparel & Footwear Association (AAFA), the United States Fashion Industry Association (USFIA), and the US Industrial and Narrow Fabrics Institute (USINFI) to develop an alternative textile and apparel incentive program, the first time these organizations have jointly advocated for a trade policy initiative. The program is designed to "reshore domestic manufacturing, stabilize and grow Western Hemisphere textile and apparel supply chains, and help brands and retailers to diversify sourcing at a critical time.

"USTR should include an innovative textile proposal that would reward the whole textile and apparel supply chain, including US cotton, through a novel program developed by NCTO and brands and retailers to create over 56,000 jobs in the United States," the submission stated.

Final decision-making by the USTR is expected to occur before July 24.