US ramps up 2025 forced labour bans on Chinese steel, copper, lithium imports, driving supply shifts and cost rises

The US government’s renewed push to enforce bans on imports linked to alleged forced labour in China’s Xinjiang region is poised to reshape global supply chains for critical materials such as steel, copper, and lithium. This escalation in scrutiny, announced amid ongoing human rights concerns, could disrupt trade flows, elevate costs for importers, and spur shifts in sourcing strategies across industries reliant on these commodities.

Escalating Enforcement and Its Market Ramifications

As of 19 August 2025, the Trump administration has signalled an intensification of oversight on Chinese exports of steel, copper, lithium, and related materials under the Uyghur Forced Labor Prevention Act (UFLPA). This move builds on a framework established in 2021, which presumes that goods produced wholly or in part in Xinjiang involve forced labour unless proven otherwise. The latest directive designates these sectors as high-priority for enforcement, potentially blocking billions in imports and compelling companies to audit their supply chains more rigorously.

The implications for global markets are profound. Steel, a cornerstone of construction and manufacturing, has long been dominated by Chinese production, with Xinjiang contributing significantly to the country’s output. Heightened US restrictions could tighten supply in North America, pushing prices higher and benefiting domestic producers. Similarly, copper—essential for electrical infrastructure and renewable energy applications—faces vulnerability, as China accounts for a substantial portion of global refining. Lithium, critical for electric vehicle batteries, adds another layer of complexity, given the rapid growth in demand from the clean energy transition.

Historical Context and Precedent

This is not an isolated action. The UFLPA, signed into law in December 2021, has already led to the detention of over $2.2 billion in goods by US Customs and Border Protection as of early 2024, according to reports from Skadden, Arps, Slate, Meagher & Flom LLP. Initial bans targeted textiles, solar panels, and agricultural products like cotton and tomatoes from Xinjiang, disrupting sectors from apparel to renewables. For instance, in January 2021, the US imposed import restrictions on all cotton and tomato products from the region, citing forced labour allegations, as detailed in Reuters coverage.

More recent expansions have broadened the net. In August 2024, five additional Chinese companies faced import bans, followed by 37 more in January 2025, encompassing textiles, mining, and solar firms. A November 2024 update barred imports from around 30 companies in food and metals, illustrating a pattern of incremental escalation. The current focus on steel, copper, and lithium aligns with this trajectory, reflecting concerns over human rights while addressing strategic vulnerabilities in critical minerals.

Supply Chain Disruptions and Corporate Responses

Companies exposed to Chinese sourcing are already adapting. Multinationals in the automotive, electronics, and energy sectors must now provide clear evidence that their supply chains are free from Xinjiang-linked materials, a process that involves extensive tracing and certification. Failure to comply risks detention of shipments at US ports, leading to delays and financial penalties.

Analyst sentiment, as reported by Bloomberg, underscores the challenges ahead. Equity research from firms like Morgan Stanley has highlighted potential cost increases of 5–10% for lithium-ion battery producers if alternative sourcing from regions like Australia or South America becomes necessary. For steel, US-based mills could see a demand boost, with capacity utilisation rates potentially rising above the 75% mark observed in historical data from 2023, per American Iron and Steel Institute figures.

Copper markets, meanwhile, are under pressure from both supply constraints and rising demand. Global copper demand is projected to grow at a compound annual rate of 3.5% through 2030, driven by electrification trends, according to the International Energy Agency’s 2024 World Energy Outlook. If US imports from China dwindle, prices could spike, echoing the volatility seen in 2022 when geopolitical tensions pushed copper futures to multi-year highs.

Economic and Geopolitical Implications

Beyond immediate trade effects, this policy intensifies US-China economic decoupling. The US has increasingly viewed dependencies on Chinese critical materials as a national security risk, particularly for lithium, where China controls over 60% of global processing capacity as of 2023 data from the US Geological Survey. By targeting these imports, the administration aims to incentivise domestic production and alliances with friendly nations, such as through the Minerals Security Partnership launched in 2022.

Forecasts from analyst models suggest varied outcomes. A base-case scenario from Wood Mackenzie indicates that lithium prices could stabilise at around $15,000 per tonne by 2027 if supply diversification accelerates, but enforcement delays might push this to $20,000 in a high-scrutiny environment. For steel, Goldman Sachs models predict a 2–4% uplift in US hot-rolled coil prices over the next 12 months, assuming a 10% reduction in Chinese imports.

Investor sentiment remains cautiously optimistic for US-centric players. According to S&P Global Market Intelligence, buy ratings on major US steel producers have increased by 15% year-over-year as of mid-2025, reflecting expectations of protected markets. However, dry humour aside, one might say that while the policy aims to chain down forced labour, it could inadvertently forge higher profits for those outside the restricted zones—provided supply chains don’t buckle under the strain.

Potential Risks and Mitigation Strategies

Risks abound, including retaliatory measures from China, which has historically responded to US trade actions with tariffs on American exports. In 2018, amid the trade war, China imposed duties on US soybeans and pork, costing exporters billions. A similar backlash could target US agricultural or tech sectors, broadening economic fallout.

• Diversification: Firms are exploring suppliers in Chile for lithium and Canada for copper, though scaling up will take years.
• Compliance Investments: Blockchain-based tracing tools are gaining traction, with pilots showing 20–30% improvements in audit efficiency, per Deloitte reports from 2024.
• Policy Advocacy: Industry groups like the US Chamber of Commerce are pushing for clearer guidelines to avoid overreach.

In summary, the stepped-up scrutiny on Chinese steel, copper, and lithium imports under forced labour bans represents a pivotal shift in global trade dynamics. While aimed at upholding human rights, it underscores the intertwined nature of ethics, economics, and geopolitics. Investors should monitor enforcement actions closely, as they could redefine competitive landscapes in these vital sectors.

References

• BBC. (2022). US bans imports of goods made with forced labour in Xinjiang region. https://www.bbc.com/news/business-61754796
• Bloomberg. (2025). US targets Chinese steel and lithium for forced labour scrutiny. https://www.bloomberg.com/news/articles/2025-08-19/us-targets-chinese-steel-and-lithium-for-forced-labor-scrutiny
• Business & Human Rights Resource Centre. (2025). Chinese mine company allegedly linked to forced labour targeted by US import ban. https://business-humanrights.org/en/latest-news/china-us-govt-impose-imported-ban-on-products-made-by-chinese-mine-company-allegedly-linked-to-forced-labour
• CNN. (2022). US enacts import ban on Xinjiang goods over forced labour concerns. https://www.cnn.com/2022/06/21/us/us-import-ban-xinjiang-goods-forced-labor-china-intl-hnk
• Fox Business. (2025). DHS expands forced labour import ban; steel and lithium imports blocked. https://foxbusiness.com/fox-news-politics/dhs-expands-forced-labor-import-ban-steel-lithium-blocks-billions-chinese-goods
• Reuters. (2021). US bans imports of all cotton, tomato products from China’s Xinjiang region. https://www.reuters.com/article/us-usa-trade-china-xinjiang/u-s-bans-imports-of-all-cotton-tomato-products-from-chinas-xinjiang-region-idUSKBN29I2KO
• Reuters. (2024). US bans imports from five more Chinese companies over Uyghur forced labour. https://www.reuters.com/sustainability/society-equity/us-bans-imports-five-more-chinese-companies-over-uyghurs-2024-08-08/
• Reuters. (2024). US bars more imports over China’s alleged forced labour. https://www.reuters.com/markets/us/us-bars-more-imports-over-chinas-alleged-forced-labor-2024-11-22/
• Reuters. (2025). US bans imports from additional Chinese companies under Uyghur forced labour law. https://www.reuters.com/world/us/us-bans-imports-more-companies-over-uyghur-forced-labor-2025-01-14/
• Reuters. (2021). US House revives bill to ban goods from China’s Xinjiang. https://reuters.com/article/us-usa-china-xinjiang/u-s-house-revives-bill-to-ban-goods-from-chinas-xinjiang-idUSKBN2AI2H7
• Skadden, Arps, Slate, Meagher & Flom LLP. (2024). Seven myths about the US law banning Xinjiang-linked imports. https://www.skadden.com/insights/publications/2024/02/the-informed-board/seven-myths-about-the-us-law-banning-imports
• The Washington Post. (2021). US bans Xinjiang cotton and tomatoes, citing forced labour. https://www.washingtonpost.com/us-policy/2021/01/13/us-ban-xinjiang-cotton-tomatoes/
• Yahoo News. (2025). US targets steel, copper, and lithium imports over forced labour concerns. https://www.yahoo.com/news/articles/us-targets-steel-copper-lithium-141929489.html