Key Points

• Labor-trade policy trend: The UFLPA and emerging agreements in Latin America and Southeast Asia are embedding forced labor import bans into trade policy, with CBP detaining shipments where traceability is lacking.
• Proactive compliance is key: Companies should conduct early, end-to-end supply chain mapping and integrate forced labor risk reviews into M&A diligence to build a defensible record, prevent detentions and protect deal value, certainty of closing and integration timelines.

In a rare example of continuity between the Trump and Biden presidencies, each administration made forced labor enforcement a central feature of their trade strategy, embedding forced labor prohibitions into trade dialogues and supply chain initiatives. As agencies sharpen their focus — especially under emerging trade agreements, the Uyghur Forced Labor Prevention Act (UFLPA) and related customs authorities —importers face heightened exposure if they cannot demonstrate traceability throughout their upstream supply chains.

For companies that source components from outside the United States, or that are acquiring entities with significant foreign import footprints, proactively evaluating supply chain risk is paramount. Agencies are expecting businesses not merely to respond to forced labor allegations, but to anticipate and prevent them through verifiable mapping and documentation.

Why Early Mapping Matters

U.S. Customs and Border Protection (CBP) may detain goods if importers cannot promptly provide detailed chain-of-custody evidence. Even inadvertent exposure could halt cargo, trigger costly reviews, and delay business integration following an acquisition.

Mapping supply chains in advance — before a shipment is detained or due diligence is underway — enables companies to:

• Identify high-risk geographies, facilities and intermediaries connected to forced labor indicators.
• Assess supplier practices and documentation gaps against legal standards.
• Build a defensible record of compliance to mitigate future enforcement actions.
• Avoid making costly indemnities when they become a target in a potential M&A transaction.

These benefits are especially important for companies utilizing complex manufacturing networks, contract suppliers or distributors with opaque sourcing structures.

A Proactive Step in M&A Due Diligence

Forced labor exposure can materially affect transaction value. Depending on the types, volume and sensitivity of imports involved, an acquirer may inherit:

• Existing CBP inquiries.
• Vulnerable supplier relationships.
• Supply chain models incompatible with U.S. labor-trade commitments.
• Penalties or suspended shipments.

Incorporating forced labor supply chain mapping into routine compliance — rather than waiting for a specific issue to arise — positions both parties to head-off or address and allocate risk early in the diligence process. It can reveal operational improvements that, if implemented pre-closing, reduce integration delays and the risk of post-closing enforcement problems.

Trending Labor-Trade Policy

The UFLPA, enacted in 2021, establishes a rebuttable presumption that any goods produced in China’s Xinjiang region — or by entities on the UFLPA Entity List — are produced with forced labor and therefore cannot be imported into the United States. Importers can overcome this only by providing clear and convincing evidence of full supply chain traceability and the absence of forced labor. In practice, that means robust due diligence of each supplier tier, end‑to‑end documentation and readiness to satisfy CBP inquiries.

The UFLPA builds on the United States’ long-standing ban on the importation of goods produced with forced labor — in China or anywhere else — under the Tariff Act of 1930.

As we wrote previously, recent reciprocal trade agreements with Malaysia and Cambodia and trade frameworks across Southeast Asia and Latin America require those countries to ban forced labor imports. These bans build on similar requirements for Mexico and Canada in the United States-Mexico-Canada Agreement (USMCA). (See our previous alerts: In Southeast Asia Trade Agreements, U.S. Is Poised to Set New Labor Standards and U.S. Looks for Worker Rights Commitments in Trade Talks with Four Latin American Countries.)

It remains to be seen how effectively these countries will administer forced labor import bans, and how aggressively the United States will enforce them. Nonetheless, companies should treat them as adjacent to the United States’ own ban under the Tariff Act of 1930: proactively map upstream suppliers, implement verification and documentation protocols, and build a defensible traceability record pre‑shipment and during M&A diligence to withstand customs scrutiny and avoid disruptions.

Each of the foregoing forced labor enforcement trends, now rooted in U.S. trade policy, are part of broader trade dynamics that could have significant economic consequences for companies that source components from outside the United States. The administration’s extensive use of tariffs since January 2025 creates its own volatility for dealmakers, as we recently discussed.

Strategies for Success

Companies can develop proactive strategies that align with rapidly evolving U.S. labor-trade expectations, including:

• Comprehensive supply-chain mapping tailored to industry and risk geography.
• Forced labor exposure assessments under the UFLPA and Tariff Act of 1930.
• Supplier Codes of Conduct, verification protocols and documentation frameworks.
• Transactional due diligence support for buyers, sellers and investors.
• Training programs and response plans for CBP inquiries or detentions.

Next Steps

As U.S. agencies continue to elevate worker rights enforcement within trade policy, companies that invest now in traceability and supplier transparency will be best positioned to avoid disruptions — and to distinguish themselves in competitive transactions.

To set proactive supply chain mapping strategies in motion, companies should contact an experienced international trade and labor counsel.

For more information on this and related topics, contact authors Brittney R. Powell at bpowell@foxrothschild.com or 202.794.1186, Mark G. Eskenazi at meskenazi@foxrothschild.com or 202.461.3109 or Matthew R. Kittay at mkittay@foxrothschild.com or 212.878.7978, or any other member of our Labor & Employment Department, International Trade Practice Group, Corporate Department or Mergers & Acquisitions Practice Group.

This information is intended to inform firm clients and friends about legal developments, including the decisions of courts and administrative bodies. Nothing in this alert should be construed as legal advice or a legal opinion. Readers should not act upon the information contained in this alert without seeking the advice of legal counsel. Views expressed are those of the authors and not necessarily this law firm or its clients.