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The United States has ushered in a sweeping new tariff regime affecting imports from 60 trading partners, replacing the temporary global tariff that had been in force for the past five months.
Effective from July 24, the measures introduced by US President Donald Trump’s administration impose duties ranging from 10 per cent to 12.5 per cent on almost all imports into the United States, with the White House arguing that many countries have failed to adequately prevent goods produced using forced labour from entering global supply chains.
While the tariffs cover around 99.4 per cent of US imports, they also include a long list of exemptions and introduce a tiered system under which countries demonstrating stronger action against forced-labour imports receive lower duties.
India is among the countries that secured the lower 10 per cent tariff rate, despite initially being placed in the higher 12.5 per cent category when the proposal was first unveiled in June.
Why did Trump replace his earlier tariff programme?
Earlier this year, the US Supreme Court
invalidated the Trump administration’s reciprocal tariffs, which had imposed duties ranging between 10 per cent and 50 per cent on imports from multiple countries under presidential emergency powers.
Those measures had been introduced in an attempt to reduce America’s trade deficit by relying on national emergency legislation.
The court’s February ruling effectively stripped the administration of its legal basis for continuing those tariffs, prompting the White House to seek an alternative route.
That alternative arrived in March, when the Office of the United States Trade Representative (USTR) initiated investigations into 60 economies under
Section 301 of the Trade Act of 1974.
Unlike the earlier reciprocal tariff programme, the investigations centred on whether trading partners had sufficient legal safeguards and enforcement mechanisms to prevent products made with forced or coerced labour from entering their domestic markets.
Over the following months, the USTR gathered extensive public feedback, reviewing more than 1,600 written submissions alongside public hearings before formulating a new tariff structure.
On June 3, the agency proposed a two-tier system that linked tariff rates directly to countries’ efforts to tackle forced labour in international supply chains.
The proposal created two broad categories. The default category imposed a tariff of 12.5 per cent on economies considered to have inadequate legislation or weak enforcement against imports produced through forced labour.
The second category offered a reduced tariff of 10 per cent to countries that had already enacted restrictions, maintained partial bans or formally committed to introducing comparable legal frameworks through ongoing discussions with Washington.
The White House
formally implemented the new tariffs through a Federal Register notice published on July 23, with the duties coming into force at 12:01 am EDT on July 24 — the exact moment the temporary global tariff expired after remaining in effect for 150 days.
To minimise disruption to international commerce, goods already in transit before the deadline were granted an exemption until 12:01 am EDT on July 28.
Administration officials have maintained that the latest measures are legally distinct from the reciprocal tariffs struck down earlier this year and therefore face significantly lower legal risks.
Section 301 has survived previous court challenges, giving the administration greater confidence that the new tariff framework will withstand future litigation.
How did India move from a proposed 12.5% to the lower 10%?
When the USTR published its proposed tariff framework on June 3, New Delhi was initially assigned the higher 12.5 per cent rate because it had not yet satisfied the conditions outlined in the investigation.
Over the next several weeks, however, India undertook a series of regulatory and diplomatic measures aimed at convincing Washington that it deserved reclassification.
The most important step came on June 14, when India’s Commerce Ministry amended the Foreign Trade Policy (FTP) to introduce explicit legal restrictions on imports manufactured using forced or coerced labour.
The amendment directly addressed the central issue identified in the Section 301 investigation.
Beyond regulatory changes, India also maintained that labour standards and supply-chain compliance should be resolved through bilateral engagement rather than unilateral punitive trade measures.
Throughout June and July, officials from both countries continued discussions, with New Delhi emphasising that it was prepared to strengthen its trade framework without resorting to confrontation.
The revised policy ultimately satisfied the USTR’s conditions for placement in the lower tariff tier.
According to USTR Ambassador Jamieson Greer, countries eligible for the 10 per cent rate include those that already enforce bans on forced-labour imports, maintain partial prohibitions or have formally committed to creating equivalent regulatory mechanisms through ongoing trade negotiations.
India’s policy amendment and diplomatic outreach were considered sufficient for US trade officials to revise the country’s classification before Trump’s Presidential Memorandum was issued on July 23.
The memorandum itself acknowledged those efforts, stating, “The decision reflects constructive steps taken by certain countries to align foreign trade policies and strengthen global supply chain integrity.”
The change means Indian exporters now face duties that are 2.5 percentage points lower than originally proposed, providing some relief across sectors including textiles, pharmaceuticals, engineering products and automobile components.
The timing is also notable because it follows another easing of trade tensions between the two countries after Washington recently removed separate 25 per cent punitive tariffs that had previously been linked to India’s purchases of Russian oil.
The United States remains India’s largest export destination and its second-largest overall trading partner. Goods trade between the two countries reached approximately $141 billion in 2025, with Indian exports accounting for $87.3 billion of that total.
Which countries face the highest tariffs?
The new Section 301 framework divides the 60 investigated economies into different tariff bands depending on how the United States assessed their efforts to prevent forced-labour imports.
Countries assigned the lower 10 per cent tariff include India, the United Kingdom, Canada, Mexico, Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, Guatemala, Honduras, Indonesia, Jordan, Malaysia, Pakistan, Sri Lanka and Trinidad and Tobago.
A separate category applies to economies such as the European Union, Japan, South Korea, Taiwan and Switzerland. Their combined tariff burden — including existing most-favoured-nation duties — ranges between 10 per cent and 12.5 per cent because of differences in commodity-specific tariffs and bilateral trade arrangements.
The remaining 38 economies have been placed in the default 12.5 per cent category. Among them is Vietnam, despite introducing a new decree this week that lays out more detailed rules prohibiting imports made with forced labour.
China also falls within this group. Washington continues to accuse Beijing of detaining Uyghur minorities in forced labour camps, allegations that China has repeatedly rejected.
Trump administration officials have separately informed Chinese counterparts that they intend to restore tariffs on Chinese goods to the 20 per cent level agreed under the November 2025 trade truce between Trump and Chinese President Xi Jinping, although they do not intend to exceed that ceiling.
Prior to the new Section 301 action, tariffs on Chinese goods had fallen to 10 per cent, excluding the 25 per cent duties imposed during Trump’s first presidency on industrial products.
What products have been spared?
Despite their broad scope, the new tariffs do not apply universally.
Administration officials have carved out numerous exemptions covering oil and gas, fertilisers, selected food products, aircraft and aircraft components, critical minerals, and products already subject to Section 232 national security tariffs, including steel, aluminium, copper and automobiles.
Goods traded under the US-Mexico-Canada Agreement (USMCA) are also exempt because of the deeply integrated North American manufacturing supply chain and the significant amount of American content embedded in those products.
How have countries reacted?
The announcement immediately drew criticism from several governments, many of which questioned both the rationale and fairness of the US action. European Union foreign policy chief Kaja Kallas dismissed Washington’s justification while attending ASEAN meetings in Manila.
“If you compare our labour laws to the ones of the United States, I mean, we have paid vacations, we have very good labour conditions for our employees, so it’s not really grounded,” she told Reuters.
Australia and Brazil described the tariffs as unjustified and indicated they would pursue efforts to have them withdrawn. Norway also rejected the US position, saying there was “no basis” for the measures.
Canada, which had already been targeted earlier in the week by separate Trump tariffs affecting $20 billion worth of goods, adopted a more restrained response.
Dominic LeBlanc, Canada’s minister responsible for US trade, said, “We will continue engaging constructively with the United States on this matter, as well as other outstanding issues, over the coming weeks to the mutual benefit of our citizens.”
How has the White House defended the move?
The White House has defended the tariffs by arguing that the United States maintains stronger import restrictions and stricter enforcement against goods produced through forced labour than virtually any other country, placing American manufacturers at a competitive disadvantage.
Officials also rejected suggestions that the latest measures merely replicate the reciprocal tariffs invalidated by the Supreme Court, despite the nearly identical timing and similar baseline duty.
Instead, they argued that the action directly responds to long-standing bipartisan calls in Congress to eliminate forced labour from international supply chains.
“The United States has had a forced labour import ban for nearly a century, and rigorously enforces it. It’s well past time for our trading partners to do the same,” Greer said.
He added, “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.”
With inputs from agencies
