The United States has proposed an additional tariff of 12.5% on imports from India, citing it among 60 economies that failed to curb imports made with forced labour. This move threatens to complicate bilateral trade negotiations currently underway in New Delhi.
Background of the Proposal
The proposal by the US Trade Representative's office came on the second day of three-day talks between Indian trade officials and a US delegation led by Assistant USTR Brendan Lynch. The USTR stated that India has failed to impose and effectively enforce a forced labour import prohibition, describing the South Asian nation's policies as unreasonable and a burden on US commerce.
Statements from US Officials
US Trade Representative Jamieson Greer emphasized that the failure of key trading partners to address forced labour imports is unacceptable, creating an unlevel playing field for American workers. However, the proposed tariffs are not final, and the USTR will consider public comments before deciding on the measures.
India's Response
India's commerce ministry confirmed on Wednesday that it remains engaged with the United States on the matter as part of Section 301 proceedings. New Delhi is also working with Washington to finalize a framework agreement unveiled in February.
Section 301 Investigation
The proposal follows a Section 301 unfair trade practices investigation as the Trump administration seeks to rebuild emergency tariffs struck down by the Supreme Court in February. India is among 54 economies lacking a forced-labour import prohibition, facing the higher proposed duty. Six other nations, including Canada, Ecuador, and Pakistan, have such prohibitions but face a lower tariff of 10% for failing to enforce them effectively.
Expert Analysis
Ajay Srivastava, founder of Global Trade Research Initiative, noted that the USTR investigation focused on whether India blocks imports tied to forced labour elsewhere, not on forced labour in Indian exports. He views the proposed tariffs as part of broader US pressure tactics and advises India to treat Section 301 actions and the bilateral trade agreement negotiations separately.
Next Steps
An Indian government source told Reuters that New Delhi plans to raise the Section 301 investigation with Lynch's team and seek tariff relief as part of a broader trade deal. The USTR report also identified India as an intermediary in cotton supply chains linked to Chinese forced-labour inputs. The agency has called for public comments on the tariff plans by July 6, with a hearing set for July 7.
