Fresh trade hurdle? India among economies facing additional US tariffs – Firstpost

India could face a fresh trade challenge just as it inches closer to a bilateral agreement with the US, after the Trump administration proposed additional tariffs on imports from dozens of countries over alleged failures to curb trade in goods produced using forced labour.

The Office of the United States Trade Representative (USTR) on Wednesday proposed imposing additional duties of up to 12.5 per cent on imports from 60 economies, including India, under Section 301 of the Trade Act of 1974.

The move is part of a broader effort by the Trump administration to revive its tariff agenda after the US Supreme Court earlier this year struck down emergency tariffs imposed under presidential powers.

The proposal comes at a sensitive moment for India-US economic relations, with
trade negotiators from both countries engaged in discussions aimed at finalising a long-awaited bilateral trade agreement.

India placed in highest tariff category

According to the USTR’s findings, India is among 54 economies that have allegedly failed both to impose and effectively enforce restrictions on imports linked to forced labour. Those countries could face additional tariffs of 12.5 per cent.

Another six economies — Canada, Ecuador, the European Union, Indonesia, Mexico and Pakistan — were found to have legal prohibitions in place but inadequate enforcement mechanisms and would face a lower tariff rate of 10 per cent.

“The failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable,” US Trade Representative Jamieson Greer said in a statement.

“This creates a dynamic where American workers are forced to compete globally on an unlevel playing field,” he added.

The list of countries facing the higher tariff rate includes major manufacturing and export-oriented economies such as China, Japan, South Korea, Vietnam, Thailand, Bangladesh and the United Kingdom.

New complication for trade pact talks

The proposed tariffs could become a key point of discussion during ongoing trade negotiations between New Delhi and Washington.

A US delegation led by Assistant US Trade Representative for South and Central Asia Brendan Lynch is currently in New Delhi for a fresh round of talks. The two sides are seeking to conclude a trade agreement that has been under negotiation since February.

According to Reuters, New Delhi is expected to seek clarity and potential relief from any tariff measures arising from ongoing Section 301 investigations.

The issue has gained significance after the Trump administration launched several Section 301 probes following a Supreme Court ruling in February that struck down tariffs imposed under the International Emergency Economic Powers Act. Since then, Washington has increasingly relied on Section 301 investigations as an alternative mechanism for imposing trade measures.

According to reports, Indian officials are also pushing for tariff treatment that would ensure the country’s exports remain competitive against rival manufacturing hubs across Asia. New Delhi is understood to be seeking preferential access compared with competing exporters such as Bangladesh, Pakistan and Sri Lanka as it seeks to strengthen its role in global supply chains.

Last week, US Ambassador to India Sergio Gor said a trade deal with New Delhi could be finalised in
the coming weeks or months, suggesting that negotiations remain on track despite lingering disagreements over tariffs and market access.

Wider trade offensive

The forced labour investigation is the latest in a series of aggressive trade actions undertaken by the Trump administration.

Earlier this week, the USTR proposed a 25 per cent tariff on many Brazilian goods following a separate Section 301 investigation into the country’s digital trade policies. The agency is also expected to unveil findings from another probe examining excess industrial capacity in several economies, including China.

Trade analysts say the administration is increasingly using labour standards, supply chain transparency and industrial policy concerns as tools to reshape global trade relationships and encourage domestic manufacturing.

Exemptions and next steps

The USTR said several products would be exempt from the proposed duties, including energy products, rare earth materials, pharmaceuticals, aircraft parts, organic chemicals, beef, coffee and certain fruits and vegetables.

The agency also proposed a separate mechanism for textile and apparel imports that could allow limited volumes to enter the US market at reduced tariff rates, although further details are yet to be announced.

The proposed measures are currently subject to public consultation. The USTR will accept comments until July 6 and hold a public hearing on July 7 before making a final decision.