Media365
India will face a lower tariff on its exports to the United States than China under a new US trade framework linked to the enforcement of bans on goods produced using forced labour.
US President Donald Trump has imposed fresh tariffs ranging from 10 per cent to 12.5 per cent on imports from around 60 trading partners, including India, China, the United Kingdom, Japan and the European Union.
While
Indian goods will face a 10 per cent tariff, Chinese imports will be subject to a higher 12.5 per cent duty.
The new tariffs took effect on Friday, replacing the temporary 10 per cent global tariff imposed after the US Supreme Court struck down Trump’s earlier “Liberation Day” tariff regime.
The latest measures are aimed at addressing forced labour in global supply chains and encouraging trading partners to strengthen enforcement of import restrictions.
Why India gets a lower tariff than China
India avoided the higher 12.5 per cent tariff after introducing policy changes to restrict imports linked to forced labour.
Earlier this month, India amended its Foreign Trade Policy to allow the government to restrict imports of goods produced wholly or partly using forced labour following an investigation.
The revised policy also adopted the International Labour Organization’s definition of forced labour.
The White House said economies that have enacted or committed to enforcing restrictions on imports produced using forced labour would qualify for the lower 10 per cent tariff rate.
India, Sri Lanka and the European Union were among the economies placed in this category.
“As a result of these actions, the Trade Representative has advised me that the goods of these economies should be tariffed at the 10 per cent rate to further encourage these economies to effectively enforce such prohibitions,” the White House said.
The decision gives India a relative tariff advantage over China in the US market.
China faces higher 12.5% US tariff
Countries that have not enacted comparable restrictions on imports produced using forced labour will face the higher 12.5 per cent tariff.
China, Japan, Australia and Brazil are among the countries listed in this category.
The tariff difference could provide Indian exporters with a modest advantage over Chinese competitors, particularly in sectors where companies from the two countries compete directly in the US market.
However, the 2.5 percentage point difference is unlikely to eliminate the broader trade and market challenges faced by Indian exporters.
US Trade Representative Jamieson Greer defended the new measures.
“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.
“Today’s action will begin to correct what is both a human rights abuse and a distortive trade practice to improve the welfare of workers everywhere,” he added.
Which imports are exempt?
The new tariff framework does not cover all imports.
Products covered by the US-Mexico-Canada Agreement, oil and gas, fertilisers and certain food items have been exempted.
Goods already subject to national security-related tariffs will also remain outside the scope of the new measures.
These exemptions are expected to limit the immediate impact of the tariff regime on several major categories of global trade.
New tariffs follow US Supreme Court ruling
The latest duties come months after the US Supreme Court struck down Trump’s earlier reciprocal tariffs, which had been imposed under emergency powers.
Following the ruling, the administration introduced a temporary 10% global tariff under Section 122 of the Trade Act of 1974.
That tariff expired on Friday.
The new duties have instead been imposed under Section 301 of the Trade Act of 1974, which allows the United States to impose tariffs following investigations into unfair trade practices.
The legal basis of the latest measures could nevertheless face judicial scrutiny.
Some legal experts have argued that the new tariffs could again test the limits of presidential authority over trade policy.
India-US trade deal could alter tariff burden
The announcement comes as India and the United States move closer to finalising an interim trade agreement.
External Affairs Minister S Jaishankar met US Secretary of State Marco Rubio in Manila earlier this week. Following the meeting, the US State Department said the proposed agreement was “almost complete”.
The proposed deal covers trade and tariffs, energy, defence, critical minerals and artificial intelligence.
Until the agreement is concluded, Indian exports will continue to face the new 10% tariff, subject to product-specific exemptions.
An agreement could potentially reduce the tariff burden on Indian exporters, depending on the terms negotiated by New Delhi and Washington.
More US tariff measures expected
The Trump administration is also expected to introduce additional tariff measures in the coming weeks.
According to a report by The Washington Post, the White House is considering tariffs targeting countries that subsidise excess manufacturing capacity.
The proposed measures would target the flow of low-cost goods into the US market, which the administration argues puts American manufacturers at a disadvantage.
The new tariffs form part of a broader effort by the Trump administration to rebuild its trade policy after the Supreme Court invalidated the earlier tariff regime.
The White House is also continuing to use tariffs as a tool to encourage companies to shift manufacturing and supply chains to the United States.
For India, the lower 10 per cent tariff compared with China’s 12.5 per cent duty provides a relative advantage over its largest Asian rival. However, the longer-term impact will depend on the outcome of the ongoing India-US trade negotiations and whether Washington introduces further tariff measures targeting specific sectors or countries.
