US-India trade deal hinges on Section 301 outcome, says policy expert – Firstpost

The trajectory of the long-pending US-India trade agreement will depend heavily on the outcome of Washington’s Section 301 tariff framework and broader uncertainty over US trade enforcement tools, a senior policy expert said, even as both sides push ahead with negotiations to finalise a bilateral economic framework.

Senior Adviser and Chair on India and Emerging Asia Economics at the Centre for Strategic and International Studies (CSIS), Richard M. Rossow, said the US tariff strategy is increasingly seen as inconsistent by global partners, adding that its reliance on multiple legal authorities has created uncertainty in trade negotiations.

“Just this kind of approach and using tools that couldn’t stand up in court has made the US approach look wobbly to a lot of our partners,” Rossow told ANI.

He added that while the intent behind US trade enforcement may not be misplaced, the lack of stability in policy execution is shaping how partners, including India, assess ongoing negotiations.

India tracking US tariff authority closely

Rossow said Indian negotiators are closely watching how US tariff authority evolves, particularly after multiple legal challenges to earlier tariff actions.

“From my own conversation with Indian officials across the last six months or so, the big question in the Indian negotiator’s mind is where is the US tariff authority gonna land,” he said.

He noted that Washington has attempted to deploy multiple instruments — including Section 301 actions and other emergency provisions — some of which have faced judicial setbacks or suspension, adding to uncertainty over the durability of US trade measures.

For New Delhi, he said, the priority is clarity and predictability in tariff policy before committing to deeper trade concessions.

Forced labour tariffs add fresh layer of friction

India could face a
fresh trade challenge even as it continues to advance negotiations with Washington, after the Trump administration proposed additional tariffs of up to 12.5 per cent on imports from 60 economies over alleged failures to curb goods linked to forced labour.

The Office of the United States Trade Representative (USTR) announced the proposed duties under Section 301 of the Trade Act of 1974, signalling a renewed escalation in US trade enforcement following earlier legal setbacks to President Donald Trump’s tariff strategy.

The move comes at a sensitive juncture for India-US trade relations, with both sides engaged in discussions to finalise a framework agreement aimed at strengthening economic ties and resolving outstanding tariff disputes.

According to USTR findings, India is among 54 economies assessed as failing to impose and effectively enforce prohibitions on imports linked to forced labour, potentially exposing it to additional tariffs of up to 12.5 per cent.

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

US Trade Representative Jamieson Greer said the measures reflect concerns over global supply chains and their impact on American workers, arguing that failure to address forced labour issues creates an uneven playing field for US industries.

India engaged in Section 301 talks

Responding to the development, India said it remains engaged with the United States on the Section 301 proceedings as well as broader negotiations on a trade framework agreement.

Officials indicated that discussions are ongoing on tariff-related concerns as well as market access issues, as both sides attempt to bridge differences ahead of a potential deal.

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, underscoring parallel tracks of negotiation and enforcement pressure.

Negotiations continue

The proposed tariff escalation follows earlier legal setbacks to US trade policy, after the Supreme Court struck down certain emergency tariffs imposed under the International Emergency Economic Powers Act, prompting greater reliance on Section 301 investigations as an alternative enforcement tool.

India and the United States had reached an initial understanding on a trade deal in February, but progress has since slowed amid shifting legal and policy positions in Washington.

Indian officials are seeking greater tariff predictability and improved access for exporters, particularly as India positions itself as a manufacturing alternative in global supply chains. New Delhi is also pushing for parity with competing Asian exporters, including Bangladesh, Pakistan and Sri Lanka.

Trade analysts say the uncertainty over US tariff authority is now central to India’s negotiating calculus, as it weighs concessions against the risk of shifting enforcement frameworks.

The forced labour-linked tariff proposal is part of a wider escalation in US trade enforcement actions. Earlier this week, the USTR proposed a 25 per cent tariff on several Brazilian goods following a separate Section 301 investigation into digital trade practices.

Washington is also expected to announce findings from another major probe into industrial overcapacity across multiple economies, including China, signalling a broader expansion of trade tools beyond traditional tariff disputes.

Trade analysts say the US is increasingly linking labour standards, supply chain compliance and industrial policy concerns to market access decisions, reshaping global trade dynamics.

The proposal is currently open for public consultation until July 6, with a public hearing scheduled for July 7 before final decisions are taken