United States has imposed a 10% tariff on imports from India under a Section 301 investigation into forced labour practices, lowering the rate from the 12.5% that had been proposed earlier. The decision, announced on Thursday, places India in the same tariff bracket as Pakistan, Bangladesh, Sri Lanka and several other Asian and Latin American countries.
The move follows a months-long investigation by the Office of the US Trade Representative (USTR) and applies to countries that Washington says have not adequately prohibited or enforced restrictions on imports made using forced labour.
US says tariff targets forced labour concerns
The new measure covers 60 countries that together account for more than 99% of US imports. It replaces the temporary 10% global tariff introduced in February, which expired this week.
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Announcing the decision, US Trade Representative Jamieson Greer said, “Today’s action will begin to correct what is both a human rights abuse and distortive trade practice to improve the welfare of workers everywhere. I am encouraged by the trading partners who have moved quickly to adopt forced labour import prohibitions, and look forward to ensuring their effective enforcement.”
The tariff stems from one of two Section 301 investigations launched by the Trump administration in March. Unlike Section 122 tariffs, which were temporary, Section 301 measures do not have an expiry date or a cap on tariff rates but require a formal investigation before implementation.
India also faces another Section 301 probe
Apart from the forced labour investigation, India is also under a separate Section 301 probe linked to alleged excess manufacturing capacity. That investigation is still in progress.
Before the final announcement, the USTR had indicated India could face a 12.5% tariff. During consultations, the Indian government and industry groups defended the country’s position, pointing to constitutional safeguards and existing laws that prohibit forced labour.
Trade agreement talks continue
The tariff decision comes while India and the US are negotiating a broader trade agreement.
In February, both countries agreed on a framework that would reduce tariffs on Indian exports from 50%, including a 25% penalty linked to India’s purchase of Russian oil, to 18%. In exchange, India proposed buying $500 billion worth of American goods over the next five years while expanding market access for selected US products, including agricultural exports.
Commerce Minister Piyush Goyal had recently said India accepted the proposed 18% tariff as it could offer a competitive edge over neighbouring countries and similar Southeast Asian economies. However, the US Supreme Court later struck down the Trump administration’s global reciprocal tariffs, leaving uncertainty over how that arrangement will eventually take shape.
Expert flags concern over India’s tariff position
As per a Hindustan Times report, trade experts believe India’s position remains uncertain because it is facing two separate Section 301 investigations, unlike countries such as Pakistan and Sri Lanka, which are involved only in the forced labour case.
Mark Linscott, senior adviser at the Asia Group and former assistant US trade representative for South and Central Asia, said, “I think the two sides are very close to agreement on the substance of the Interim Agreement, but they may be stuck on India’s insistence that it have clarity first that it will receive a preferential tariff compared to other countries. Some of those, such as Pakistan, Sri Lanka, and the Philippines, are not subject to the excess capacity 301, so it is hard to see how they might have a higher aggregate tariff than India, at least until new 301 cases that include them are initiated.”
FAQs:
Why did the US impose a 10% tariff on India under Section 301?
The US imposed the 10% tariff after a Section 301 investigation concluded India had not sufficiently enforced restrictions on imports linked to forced labour.
Will the 10% US tariff affect the India-US trade deal?
Trade negotiations are continuing, but India’s tariff position remains under discussion as both countries work towards an interim agreement.
