The State Department downgraded China and Russia in rankings on how 188 governments around the world have performed in fighting the flesh trade and other forms of exploitative labor.
The US also downgraded Uzbekistan over its state-sanctioned use of forced labor in the annual cotton harvest.
The rankings are in the department's annual report released Wednesday.
President Barack Obama now has 90 days to determine whether to apply sanctions against China, Russia, Uzbekistan and 18 other governments given a "tier three" ranking, the lowest the department gives.
The president can block various types of aid, such as arms financing, grants for cultural and educational exchange programs and could withdraw US support for loans from the World Bank and International Monetary Fund.
That appears unlikely in the cases of China, Russia and Uzbekistan, which have strategic importance for Washington.
Obama is looking to cooperate more closely with emerging Asian superpower China after meeting its leader Xi Jinping last week; he already faces growing friction with Russia over its support for the Assad regime in war-wracked Syria; and the Central Asian nation of Uzbekistan is important as a transit point as the US pulls out its military from Afghanistan.
Because of a legislative requirement that came into force this year, the Obama administration had to make a judgment whether to downgrade or upgrade the three nations from a "watch list" they were on for several years.
Three others in the same position are Azerbaijan, Congo and Iraq who were promoted to "tier two" for progress made in the past year.
"Modern-day slavery affects every country in the world, including the United States and every government is responsible for dealing with it and no government is yet doing enough," Secretary of State John Kerry said at the launch of the report, which he conceded "pulls no punches."
"This report is tough because this is a tough issue and it demands serious attention and that's precisely what we intend to provide."
Activists commended Kerry for being willing to downgrade powerful nations.
"Frankly, we expected a number of these countries to be upgraded for geopolitical reasons," said David Abramowitz, director of the U.S.-based Alliance to End Slavery and Trafficking. "The Trafficking in Persons report is only effective when it's honest."
John Sifton of Human Rights Watch said it remains to be seen whether the White House will execute sanctions. He urged the administration to do so unless the governments in question commit to fight trafficking.
China responded that it has made "unremitting efforts" that have seen a decrease in human trafficking in the country, and in April its governing State Council issued an plan in accordance with international conventions and Chinese laws, aiming for a long-term solution to the problem.
Geng Shuang, the Chinese Embassy spokesman in Washington, said the US report "disregards our efforts in combating human trafficking and makes irresponsible judgment on other countries' internal policy and practice." He called for the US to foster "a more favorable environment" for international anti-trafficking efforts.
The Russian Embassy did not respond to an email seeking comment.
The State Department also put Malaysia and Thailand, a US treaty ally, on notice that they would be downgraded next year to tier three unless they improve anti-trafficking efforts. Abramowitz said it showed that those Southeast Asian nations can't count on their political relationship with the US to avoid censure.
Luis CdeBaca, US ambassador-at-large for human trafficking issues, voiced concern over Thai authorities' treatment of Myanmar migrants, including minority Muslims fleeing a wave of sectarian violence at home. He also referred to "very grave" problems with Malaysia's treatment of trafficking victims, who are held in prison-camp type conditions before deportation.
The Trafficking in Persons report is one of several annual assessments issued by the State Department on human rights-related topics, but it's unusual in that it ranks nations, which can ruffle diplomatic feathers. It is based on the actions governments take, rather than the scale of the problem in their country.
The United States is also scrutinized in the report. It is among 30 countries on "tier one" and judged to meet minimum standards of combating human trafficking.
According to CdeBaca, the report is intended to prod governments to act and strengthen the hand of civil society organizations in fighting trafficking and forced labor. He said the U.S. seeks to help nations improve their ranking through technical assistance and law enforcement cooperation.
The report criticized China's government for perpetuating trafficking through its use of forced labor in more than 300 state-run prison camps, and its forcible deportation of North Korean trafficking victims, who may face the death penalty on their return home. Girls from Tibet are reportedly trafficked to other parts of China for domestic servitude and forced marriage, it said.
Republican Rep. Chris Smith, an arch critic of Beijing and an author of anti-trafficking legislation, welcomed China's downgrade as recognition that it "has become the sex and labor trafficking capital of the world."
CdeBaca was more conciliatory. He acknowledged China's recent national action plan to combat trafficking, and noted reports China plans to end the practice of re-education through labor. He indicated that if those plans lead to results, it would count in China's favor in next year's report.
On Russia, he said the main concern was authorities' failure to provide care for victims of human trafficking.
An estimated one million people in the country are exposed to "exploitative" labor conditions, including migrants from Europe, Central Asia, and Asia, according to the report. Among them are between 10,000 and 15,000 North Korean workers employed at logging camps in Russia's far east, under an arrangement between the two governments. The workers reportedly have only two days of rest per year and face punishments if they fail to meet production targets.
There are now 25 nations sitting on the department's watch list that could be downgraded to tier three next year. That relegation can be waived for two years, if governments demonstrate they have a plan to address human trafficking and commit resources to implement it.
Of the 25, six countries are Thailand, Malaysia, Afghanistan, Barbados, Chad and the Maldives which are entering their second year of being waived. Each faces an automatic downgrade in 2014 unless they demonstrate progress.