KEY POINTS
- Uruguay faces a 12.5% US tariff under a new forced labor trade scheme, up from 10%.
- The measure affects 60 trading partners and replaces the universal 10% tariff.
- Uruguay is at a disadvantage compared to regional peers like Argentina and Mexico, which face lower rates.
Uruguay has been placed in the highest band of a new US tariff scheme, facing an additional 12.5% levy on its exports to the United States due to the absence of an explicit ban on imports of goods produced with forced labor. The measure took effect on Friday, raising the previous rate of 10% that had applied since February.
According to a report by MercoPress, sources at Uruguay’s Foreign Ministry confirmed the decision and said its implications are being analyzed, noting that the outcome “was within expectations.” The Ministry of Economy and Finance also confirmed the increase from 10% to 12.5%.
The new scheme, applied under Section 301 of US trade law, covers 60 trading partners accounting for about 99% of US imports. It replaces the 10% universal tariff that expired on Friday. Under the USTR’s determination, the 12.5% rate applies to economies that have not adopted a ban on imports of goods produced with forced labor, did not commit to implementing one through a reciprocal trade agreement, and are not part of a differentiated calculation group that includes the European Union, Japan, South Korea, Taiwan, and Switzerland.
The breakdown places Uruguay at a disadvantage relative to several regional partners. Argentina, Ecuador, Mexico, Guatemala, Honduras, and El Salvador fell under the lower 10% rate, having adopted restrictions or committed to doing so. Costa Rica, Panama, and the Dominican Republic face 12.5%, as does Uruguay. Brazil, meanwhile, has been subject to 25% tariffs under the same legal instrument since Wednesday, following a separate investigation.
US Trade Representative Jamieson Greer stated, “The United States has had a forced labor import ban for nearly a century, and rigorously enforces it; it’s well past time for our trading partners to do the same.” The USTR said certain products are exempt, including raw materials whose higher cost could cause supply shortages in the US market, though a detailed list was not published. China does not appear in this scheme, as it is subject to separate and higher tariffs.
The round is part of the Trump administration’s effort to rebuild its tariff structure after the Supreme Court struck down in February tariffs issued under an emergency powers law, finding that the administration had exceeded its authority.
Trade Policy Implications for Investors
For international investors and expats in Uruguay, this tariff increase signals a shift in Uruguay’s trade competitiveness relative to its neighbors. The higher levy may affect export-oriented sectors, potentially impacting economic growth and currency stability. However, Uruguay’s proactive engagement with the US and its ability to negotiate reciprocal trade agreements could mitigate long-term risks. Investors should monitor Uruguay’s response and any potential adjustments to its trade policies, as these will influence the country’s attractiveness as a stable investment destination in the region.
