US President Donald Trump's latest round of import taxes would see Australian goods subject to a 12.5 per cent levy - an increase on the current 10 per cent tariff - from July 24.
"The acts, policies and practices of Australia related to the failure to impose and effectively enforce a forced-labour import prohibition are unreasonable and burden or restrict US commerce," US Trade Representative Jamieson Greer found in a report published overnight.
"The failure of our most important trading partners to address the importation of goods made with forced labour is unacceptable ... we will no longer tolerate this disparity," Mr Greer said in a separate statement on Wednesday (AEST).
But Treasurer Jim Chalmers disputed that claim, saying Australia's modern slavery laws were "world leading".
"We maintain the position that these tariffs are unwarranted, they're unjustified, and they're inconsistent with our free-trade agreement with the US, and we've made that case repeatedly," he told reporters outside Parliament House on Thursday.
"When it comes to the specifics of the modern slavery laws, we've got world-leading legislation in place already to combat the evils of modern slavery."
The tariffs are unwarranted and will only push up prices for consumers in the US, Prime Minister Anthony Albanese said on Thursday.
"There is an ideological disagreement where the United States administration has broken with what was a decades-long understanding that tariffs are not positive for the country that is imposing them," he told the ABC's AM program.
Trade Minister Don Farrell spoke with Mr Greer on the sidelines of the OECD ministerial meeting being held in Paris to argue the new import tax was unjustified.
Beef and gold from Australia will maintain their existing exemptions from US tariffs, AAP understands.
Other American allies, including Canada, Israel, Japan, New Zealand and the European Union, along with adversaries such as China and Russia, are also covered under the latest tariff ruling.
Nationals leader and opposition trade spokesman Matt Canavan said the tariffs were based on a "fig leaf" of justification.
"Just weeks after the US Supreme Court struck out the Trump administration's first tariffs, the US launched an investigation of whether Australia fails to impose and effectively enforce a prohibition on the importation of goods produced with forced labour," he said in a statement.
"Its report is a smokescreen to justify tariffs it clearly intended to put on in any case."
Opposition Leader Angus Taylor blasted the "rotten" tariffs and said the US was wrong to impose them.
"There shouldn't be tariffs like this imposed on Australia, and the United States shouldn't do it... we fought with them in every war, every major war, they shouldn't be imposing tariffs on us," he said.
"It's not what we want to see, and we'll fight against rotten tariffs."
Former Australian ambassador to the US Joe Hockey said he'd argued personally with Mr Trump about his tariff policies and warned he was "not for moving".
"America is running out of money, and they need to get it from somewhere," he told ABC Radio.
"The president of the United States is convinced that foreigners pay tariffs imposed by America, whereas in fact it is American consumers that pay higher prices," Mr Hockey told ABC Radio on Thursday.
