No Funds for Forced Labor Act

The 'No Funds for Forced Labor Act' (S1685), introduced on May 8, 2025, by Senator Scott (R-FL) and cosponsored by Senator Merkley, has been read twice and referred to the Committee on Foreign Relations. This bill aims to require the Secretary of the Treasury to instruct U.S. Executive Directors at international financial institutions to oppose projects that use or have a significant risk of using forced labor. A companion bill, HR7516, has been introduced in the House. This bill does not authorize or appropriate specific funding amounts. Instead, its mechanism is regulatory, directing U.S. influence within international financial institutions to block funding for projects implicated in forced labor. This would effectively increase the cost of capital and operational expenses for companies that rely on such labor practices, particularly those operating or sourcing from regions like the Xinjiang Uyghur Autonomous Region. Structural losers would be companies with extensive global supply chains that have exposure to regions identified with forced labor. This includes major players in the Manufacturing, Consumer, and Technology sectors. Companies like Apple Inc. ($AAPL), Tesla, Inc. ($TSLA), Amazon.com, Inc. ($AMZN), and Walmart Inc. ($WMT), which have complex international supply chains, could face increased scrutiny and potential disruption. The bill's focus on international financial institutions means that the impact would be felt through financing restrictions rather than direct U.S. government procurement changes. Looking at recent market data, Apple Inc. ($AAPL) is currently at $248.37, down 2.14% over the last 7 days and 3.53% over the last 30 days. Tesla, Inc. ($TSLA) is at $340.83, showing a significant decline of 8.32% over 7 days and 14.09% over 30 days. Amazon.com, Inc. ($AMZN) is at $210.25, up 0.95% over 7 days but down 1.39% over 30 days. Walmart Inc. ($WMT) is at $123.58, down 0.56% over 7 days and 0.18% over 30 days. While these movements are influenced by various market factors, the potential for increased supply chain costs and disruptions from legislation like S1685 adds a bearish element for companies with global manufacturing and sourcing dependencies. The bill is in the early stages, having just been referred to committee, and will need to pass through committee, the full Senate, and the House (or its companion bill HR7516) before becoming law.