US moots 12.5% tariff on India, 53 others over ‘forced labour’

NEW DELHI: In a widely anticipated move, the US Trade Representative Tuesday proposed 12.5% tariff on exports from 54 countries, including India and China, accusing them of failure to prohibit import of goods using forced labour.

The announcement came while American officials are in India to discuss the details of the framework agreement, which commerce & industry minister Piyush Goyal had said is close to finalisation.

USTR is also expected to release its report on the second probe launched by it – dealing with excess capacity in 16 countries, including India – in what is seen as a move to replace the temporary 10% in place till July 24.

In a statement, the commerce & industry ministry said: “India remains engaged with the US on the matter as a part of section 301 proceedings. India is also parallelly engaged with the US for finalisation of a framework agreement as was announced on 2nd Feb 2026 and in accordance with the joint statement released on 7th Feb 2026.” In its submissions to USTR, govt agencies and businesses had dismissed the allegations and called the probe unjustified, arguing that it was an issue on which there were global rules.

Govt officials, who have held multiple rounds of discussions with their American counterparts over the last few months, were expecting the US to rely on section 301 to impose additional tariffs, a main policy lever for the Trump administration’s efforts to discourage exports and get countries to negotiate duties bilaterally.

Govt has maintained that it will agree to a bilaterally negotiated rate if India gets a comparative advantage over rival countries.

Many key export sectors at risk of forced labour: USTR
While India, UK, China, Japan, Switzerland, Bangladesh, Sri Lanka and Vietnam face 12.5% tariffs, six countries – EU, Pakistan, Canada, Mexico, Indonesia and Ecuador – face the prospect of an additional 10% tariff.

In its report, USTR alleged that there was evidence of use of forced labour in cotton and polysilicon in the supply chain in China, which was used by other countries under probe. It also said that steel, aluminium, automobiles and auto parts, electronics and agriculture, which are often part of trans-shipment practices are often at risk of forced labour. It said that these practices have impacted American goods.

“…the results of this investigation indicate that the acts, policies and practices of India related to the failure to impose and effectively enforce a forced labour import prohibition are unreasonable and burden or restrict US commerce,” USTR said in its report with identical findings for each country.

Now, the agency has sought comments by July 6 and will hold hearings on July 7 before determining the final action.

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