U.S. moots 12.5% tariff on India

 

U.S. moots 12.5% tariff on India for failure to enforce ‘forced labour’ regulations





WHY IN NEWS ?




The U.S. government has proposed to levy a 

  • tariff of 12.5% on imports from 54 countries, 
  • including India,
  • failed to impose and effectively enforce” prohibitions on the import of goods produced using forced labour.



In response, the Indian government has said 

  • it “remains engaged” with the U.S. government regarding this development 
  •  finalisation of an Interim Agreement on trade.


U.S. Trade Act of 1974


The office of the U.S. Trade Representative (USTR) had, in March this year, launched an investigation under Section 301 of the U.S. Trade Act of 1974 

to look into whether its trade partners were taking enough steps to stop the import of goods made using forced labour.


The latest tariff announcements, as part of this investigation, are not final as yet.


 India, can submit requests



Countries, including India, can submit requests to take part in 

  • public hearings by June 22, 
  • submit written comments by July 6, 
  • and participate in the public hearings on July 7.


Tool to impose tariff



as a tool for the U.S. to impose tariffs on its imports


According to trade experts, investigations under Section 301 was seen as a tool for the U.S. to impose tariffs on its imports 


after the country’s Supreme Court in February struck down the reciprocal tariffs — including the 50% levied on India — that had been imposed by U.S. President Donald Trump.



same tariff bracket

The proposed tariffs put India in the same tariff bracket as several of its competitors, including 

  • Bangladesh, 
  • China, 
  • Malaysia, 
  • Thailand, and 
  • Vietnam


 textile and apparel products



The proposal by the USTR also includes a separate mechanism for textile and apparel products, under which a certain volume of imports from selected economies would be allowed to enter the U.S. at lower tariff rates.


 impact of these tariffs on India could be multidimensional

“In the near term, exporters in labour-intensive industries such as 

  • textiles, 
  • garments, 
  • carpets, 
  • leather products, 
  • and brassware could face at least an additional 10% levy under Section 301, adding to their existing tariff exposure,” 

. “India should therefore submit detailed written representations by July 6 and participate proactively in the July 7 public hearing to challenge these conclusions,” he added.

Govt. response

“India remains engaged with the U.S. on the matter as a part of Section 301 proceedings,” the Ministry of Commerce and Industry said in a statement on Wednesday. “India is also parallelly engaged with the U.S. for finalisation of a framework agreement as was announced on February 2, 2026, and in accordance with the joint statement released on February 7, 2026,” it added.

A negotiating team from the U.S. is currently in India on a three-day visit that will conclude on June 4.

According to the Ministry of Commerce and Industry, the purpose of the trip is to “finalise the details” pertaining to the Interim Agreement between the two countries and take forward the negotiations on a broader Bilateral Trade Agreement (BTA).

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