US slaps 10% tariff on India under Sec 301 probe linked to forced labour

The new tariff announcement on Friday comes as Washington's baseline tariff of 10 per cent for all trading partners expires

The United States (US) has imposed a 10 per cent tariff on Indian goods following its Section 301 investigation related to forced labour, effectively retaining the existing tariffs on New Delhi.

The new tariff announcement came as Washington’s baseline global tariff of 10 per cent for all trading partners expired on Friday.

 

The US trade representative (USTR) had initially proposed a 12.5 per cent tariff for India last month. However, following public hearings and New Delhi’s amendment to the Foreign Trade Policy to curb imports related to forced labour, the US lowered the final designated duty for Indian goods to 10 per cent.

 

“Based on the findings in the investigation of India, including India’s adoption of a forced labour import prohibition, and considering the public comments and testimony, the advice of the Section 301 Committee, as well as the advice of advisory committees, and in accordance with the specific direction of the president, the trade representative has determined to impose 10 per cent tariffs on products of India,” the Office of the USTR said in its final investigation report.

Accounting for the exemptions, 60-65 per cent of Indian imports are likely to attract this 10 per cent levy, Delhi-based think tank Global Trade Research Initiative’s founder Ajay Srivastava said.

 

“The Trump administration is expected to announce the results of another Section 301 investigation into excess manufacturing capacity, which could lead to additional tariffs on a wide range of industrial products. Washington has also increasingly imposed country-specific tariffs, targeting Brazil and Canada. Similar measures could eventually be extended to India, citing purchases of Russian oil, or broader geopolitical considerations,” Srivastava added.

 

The USTR had initiated investigations into 60 economies earlier this year, and subsequently imposed a 10 per cent duty on 17 economies, including India, and a 12.5 per cent duty on others.

 

“Trading partners that have made commitments to adopt, and effectively enforce, forced labor import prohibitions will have a 10 per cent tariff, and trading partners that have failed to adopt a forced labor import prohibition will have a 12.5 per cent tariff rate,” the Office of the USTR said in a statement.

 

Other economies with tariffs at par with India’s are Indonesia, Cambodia, Malaysia, Bangladesh, Pakistan, Sri Lanka, the United Kingdom, Canada, Argentina, Mexico, Ecuador, El Salvador, Guatemala, Honduras, Jordan, and Trinidad and Tobago.

 

The White House has exempted the 10 per cent duty on certain areas like petroleum products and some farm products.

 

Sectors like steel, auto, and pharmaceuticals that attract itemwise tariffs in the US under Section 232 are also not subject to the forced labour-related duty levy.

 

Some economies have also got country-specific exemptions, like textiles and apparel from Bangladesh, Cambodia, Indonesia, and Malaysia under a tariff rate quota for using US-origin cotton and fibre.

 

India didn’t receive such exemptions.

 

Confederation of Indian Textile Industry Chairman Ashwin Chandran raised concern over the matter, holding that the “differential treatment” risks diverted sourcing orders for textile and apparel items away from India.

 

The tariffs are being viewed as a substitute for the reciprocal tariffs imposed in April last year by the Donald Trump administration under the International Emergency Economic Powers Act (IEEPA). Those tariffs were struck down by the Supreme Court of the US in February.

 

The Office of the USTR has another investigation against India underway. It alleges excess capacity under Section 301 of the US Trade Act of 1974, which allows Washington to investigate and act against trade practices it considers harmful to US commerce.

 

Meanwhile, India and the US remain engaged in negotiations on a trade deal, which will likely address New Delhi’s concerns over Washington’s Section 301 investigations and tariffs. India’s Department of Commerce didn’t issue a statement on the tariff announcement till the time of going to press.

 

Federation of Indian Export Organisations (FIEO) President S C Ralhan said: “A sustained bilateral dialogue will be equally important to secure wider product exclusions, seek treatment comparable with other partner countries, pursue India’s inclusion in any textile tariff-rate quota mechanism and work towards an early review of the tariff.”

 

The US was India’s top export destination in FY26 with nearly a one-fifth share in outward shipment. India also imported goods worth $53.49 billion from the US and had a trade surplus of $33.83 billion last financial year. 

Terms & conditions

• The USTR had proposed 12.5% tariff, lowered it to 10% after New Delhi amended the Foreign Trade Policy
• India among 17 economies attracting the lower levy
• No textile tariff quota despite concessions for Bangladesh, Cambodia, Indonesia, Malaysia
• 60-65% of Indian exports to the US likely to attract the duty
• Another Section 301 probe on India’s excess capacity may trigger fresh tariffs