NEW DELHI: The United States (US) has proposed an additional 12.5 per cent tariff on India and 53 other countries, citing their alleged failure to stop imports made with forced labour in third countries, even as officials from India and the US tried to finalise an interim trade deal.
However, the duty proposed by the office of the US Trade Representative (USTR) will not take effect immediately, as Washington has invited public comment on the proposed tariff action by July 6. The USTR will hold hearings on the matter on Jul 7.
The 53 countries listed by the USTR also include China, Vietnam and the UK. “The results of this investigation indicate that the acts, policies and practices of India related to the failure to impose and effectively enforce a forced labour import prohibition are unreasonable and burden or restrict US commerce,” the USTR said in its investigation report, released on Wednesday.
As reported by Business Standard on Monday, the US is likely to assure India that it will not impose additional tariffs under Section 301 if the two sides conclude the interim trade deal before July 24, when the current 10 per cent baseline US tariff is set to expire. The tariff proposal follows the USTR’s probe into 60 countries under Section 301 of the Trade Act of 1974. These countries account for 99.4 per cent of imports by the US. The section allows Washington to probe and act against trade practices that it deems to be harmful to US commerce.
The USTR has proposed a lower extra tariff of 10 per cent on six other economies – Pakistan, Indonesia, Mexico, Canada, Ecuador and the European Union – crediting them for imposing a “partial regime” to prevent the import of goods made with forced labour.
The USTR also proposed a special mechanism to import certain volumes of textile and apparel products from select countries at lower tariff rates. It is yet to release the details of the mechanism. Responding to the USTR measure, the commerce department said India remains engaged with the US on the matter as part of Section 301 proceedings.
“As per the report, the proposed tariffs are not yet final, and stakeholders can submit requests to participate in public hearings by 22 June 2026… The USTR will consider the comments and testimony received before taking a final decision on the proposed measures,” it said in a statement. The tariff proposal on India comes at a time when officials from the two sides are engaged in finalising pending issues for the interim trade deal in New Delhi.
Wednesday was the penultimate day of their planned three-day meeting.
India and the US finalised an interim trade deal in February that proposed a reciprocal tariff of 18 per cent on Indian goods. However, soon after, the US Supreme Court struck down the reciprocal tariffs imposed by President Donald Trump under the International Emergency Economic Powers Act.
After the US Supreme Court ruling, Trump has imposed a blanket tariff of 10 per cent on all trading partners until July 24 under Section 122 of the Trade Act of 1974. The proposed tariff of 12.5 per cent is likely to be finalised by July 24, before the baseline duty expires.
The USTR had in March also initiated another investigation alleging overcapacity against its trading partners, including India, under Section 301. Washington is yet to release its findings of this investigation.
Ajay Srivastava, founder of Delhi-based think-tank Global Trade Research Initiative (GTRI), said the proposed 12.5 per cent tariff is part of a broader attempt by Washington to mount pressure on India through Section 301 investigations and tariffs.
“The investigation is not based on allegations that Indian exports are produced using forced labour. Rather, the USTR action focuses on whether countries prohibit imports made with forced labour in third countries. New Delhi should treat the BTA (bilateral trade agreement) negotiations and the Section 301 investigations as separate matters. For doing this, India must be prepared to fight and pay Section 301 tariffs like other countries,” Srivasatva added.
The US is India’s top export destination, accounting for nearly 20 per cent of the country’s total outbound shipments. India had a trade surplus of $33.83 billion with the US in 2025-26.
Source: Business Standard / The New Indian Express
