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The United States has imposed new tariffs on imports from India and 59 other economies as President Donald Trump moves to rebuild his global tariff regime, with the new duties coming days after New Delhi tightened its rules on goods made using forced labour.
India has been placed in the lower 10 per cent tariff category under the new US measures, according to a report by the Financial Times. The duties target countries over what Washington describes as inadequate efforts to prohibit imports produced using forced labour.
The move comes at a crucial moment for India-US trade ties. New Delhi and Washington are negotiating an interim trade agreement that the US State Department said on Wednesday was “almost complete” following a meeting between External Affairs Minister S Jaishankar and US Secretary of State Marco Rubio in Manila.
The two sides had discussed trade, tariffs, energy, defence, critical minerals and artificial intelligence.
What does the new US tariff mean for India?
The new 10 per cent duty is expected to affect Indian exporters across sectors that depend heavily on the US market, including textiles, apparel, leather, engineering goods and other labour-intensive industries.
The impact will vary depending on the product and whether it is already covered by separate US tariff measures.
According to the report, the US has exempted several categories from the new duties, including certain energy products such as oil and gas, fertiliser and some food items. Goods already subject to separate national security tariffs under Section 232, including certain steel, aluminium, copper and automobile products, will also be excluded.
The United States has also carved out certain goods that cannot be produced domestically in sufficient quantities or sourced from alternative suppliers.
Goods traded under the US-Mexico-Canada Agreement will also be exempt, reflecting the deep integration of North American supply chains.
Why is Trump imposing new tariffs?
The Trump administration has framed the new tariffs as a response to forced labour in global supply chains.
Washington has argued that countries that fail to prevent goods made using forced labour from entering international commerce give their exporters an unfair advantage over American workers.
The new tariffs are being imposed under Section 301 of the Trade Act of 1974, which allows the US to take action against what it determines to be unfair or unreasonable trade practices.
The move comes after the US Supreme Court struck down the legal basis for Trump’s earlier sweeping reciprocal tariffs.
The administration subsequently imposed a temporary 10 per cent global tariff under Section 122 of the Trade Act of 1974. That duty is now expiring, with the new Section 301 tariffs taking its place for the affected economies.
The latest move is part of a broader effort by the Trump administration to reconstruct its tariff regime using different provisions of US trade law.
India moved to ban forced-labour imports
India’s inclusion in the lower tariff category follows a major policy change by New Delhi.
On July 15, India amended its Foreign Trade Policy to empower the government to
prohibit imports of goods produced wholly or partly using forced labour.
The Directorate General of Foreign Trade said the government could restrict imports of such goods after an investigation and consultations with stakeholders.
India also adopted the International Labour Organization’s definition of forced labour, which refers to work or service extracted under the threat of a penalty and without the individual’s voluntary consent.
The move came as the US Trade Representative was investigating around 60 economies, including India, over whether they had adequate safeguards against goods linked to forced labour.
Washington had initially proposed a 12.5 per cent additional tariff for countries that failed to address such concerns. However, countries that had enacted, committed to enact or partially implemented measures to prohibit forced-labour imports were placed in the lower 10 per cent category.
India’s policy move therefore assumed significance as the US investigation progressed.
India-US trade deal ‘almost complete’
The new tariff comes just days after Washington indicated that its interim trade agreement with New Delhi was
close to being finalised.
Jaishankar and Rubio met on the sidelines of Association of Southeast Asian Nations ministerial engagements and Quad-related meetings in Manila on Wednesday.
The US State Department said the two leaders “agreed on the importance of finalizing the interim trade deal, which is almost complete”.
The talks covered tariffs and trade, along with energy, defence and security, critical minerals and AI.
The two sides also discussed regional and global issues, including developments in West Asia and the Indo-Pacific.
The progress on the trade agreement could help provide some certainty for Indian exporters, although the new 10 per cent US tariff means Indian goods will continue to face a significant duty burden in the American market unless specific products are covered by exemptions or a separate agreement.
Indian pharmaceutical exporters face a separate tariff threat
The new 10 per cent tariff also comes as Indian pharmaceutical companies face a separate and potentially much bigger challenge from Washington.
Trump has announced a phased
tariff plan for imported generic drugs, with tariffs remaining at zero for two years from August 1, 2026, before rising to 100 per cent for one year and then 200 per cent thereafter.
The plan is aimed at forcing pharmaceutical companies to shift production to the United States.
India is particularly exposed to the policy because it is one of the world’s largest suppliers of generic medicines and supplies nearly 30 per cent of generic drugs globally.
The two-year zero-tariff period gives Indian pharmaceutical companies time to assess whether to expand US manufacturing, restructure supply chains or absorb potentially higher costs in the future.
The policy could have significant implications for the US pharmaceutical market, where generic medicines account for a large share of prescriptions.
India-US ties have faced recent strain
The latest trade negotiations are taking place against the backdrop of broader tensions in India-US relations.
Bilateral ties came under pressure after Washington imposed higher tariffs on Indian goods and Trump repeatedly claimed that he had helped defuse military tensions between India and Pakistan following last year’s conflict. New Delhi rejected those claims and maintained that the cessation of hostilities resulted from direct military-level communication between the two countries.
Differences over US immigration measures, including higher H-1B visa fees, also added to tensions.
Despite the challenges, both sides have continued to expand cooperation in defence, critical minerals, technology and supply chains.
The Jaishankar-Rubio meeting indicated that both governments are seeking to keep the broader strategic relationship on track even as trade and tariff issues remain unresolved.
India seeks to diversify its export markets
The latest US tariff action also comes as India looks to strengthen its access to other major markets.
The India-UK Comprehensive Economic and Trade Agreement has opened the way for zero tariffs on nearly all products traded between the two countries.
India’s pharmaceutical exporters are expected to benefit from improved access to the UK market. Pharmexcil has projected India’s pharmaceutical exports to the UK to rise 8.66 per cent to $981.16 million in FY2026-27.
The UK is India’s largest pharmaceutical export market in Europe and the third-largest globally.
The new US tariff regime could add further urgency to India’s efforts to diversify export destinations while securing more favourable terms in its trade negotiations with Washington.
For now, the 10 per cent tariff represents a lower rate than the 12.5 per cent duty initially proposed under the forced-labour investigation. India’s decision to prohibit imports made using forced labour appears to have helped address one of the concerns at the centre of the US review.
But with an interim India-US trade deal still awaiting finalisation and separate threats to India’s pharmaceutical exports looming, the latest tariff action highlights the increasingly complex trade environment facing Indian exporters.
With inputs from agencies.
