The United States has proposed imposing an additional 12.5% tariff on imports from India, citing the country’s inclusion among 60 economies that have not adequately restricted imports produced with forced labour. The move could complicate ongoing bilateral trade negotiations in New Delhi.
Trade Negotiations
The proposal, announced by the U.S. Trade Representative’s office, came on the second day of a three-day round of talks between Indian trade officials and a U.S. delegation headed by Assistant USTR Brendan Lynch.
India “has failed to impose and effectively enforce a forced labour import prohibition,” the office said in a 92-page report on Tuesday that calling the nation’s policies unreasonable and a burden on U.S. commerce.
The USTR review focuses on whether countries prohibit the import of goods linked to forced labour in global supply chains. It does not specifically allege that Indian exports are produced using forced labour.
India’s commerce ministry has yet not made any comments.
Broader Implications
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.
Under the findings, India was placed among 54 economies that the USTR says do not have a legal prohibition on the importation of goods produced with forced labour.
Six other nations, from Canada, Ecuador and the European Union to Indonesia, Mexico and Pakistan, have such prohibitions but face a lower tariff of 10% for failing to enforce them effectively.
Ajay Srivastava, founder of Global Trade Research Initiative, said the finding could be challenged, as the USTR investigation was not about forced labour in Indian exports but whether India blocked imports tied to forced labour elsewhere.
“The proposed tariffs are viewed as part of broader U.S. pressure tactics, and India should treat Section 301 actions and the India–U.S. bilateral trade agreement negotiations separately,” he said.
An Indian government source had told Reuters that New Delhi planned to raise the issue of the Section 301 investigation with Lynch’s team and seek tariff relief as part of the broader two-way trade deal.
The USTR report also identified India as an intermediary in cotton supply chains linked to Chinese forced-labour inputs.
(With inputs from Reuters)
