US Plans New Tariffs as India, China Face 12.5% Duty

Synopsis:  The United States has proposed new tariffs of up to 12.5% on imports from India and several other countries under a Section 301 investigation, potentially adding pressure to ongoing India-US trade negotiations.

The United States has proposed imposing additional tariffs of up to 12.5% on imports from India and dozens of other trading partners following the findings of a Section 301 investigation conducted by the Office of the United States Trade Representative (USTR). The move is part of a broader effort by the US administration to address concerns related to the importation of goods allegedly linked to forced labour in global supply chains.

According to the USTR’s findings, India is among 54 countries identified as having insufficient measures to prohibit or effectively enforce restrictions on the import of goods produced through forced labour. As a result, the agency has proposed an additional 12.5% tariff on imports from these economies. The proposed duties are currently under review and will be subject to a public consultation process before any final decision is taken.

The proposal stems from a Section 301 investigation, a mechanism under the US Trade Act of 1974 that allows Washington to take action against foreign trade practices deemed unfair or harmful to American commerce. US Trade Representative Jamieson Greer stated that inadequate enforcement of forced-labour prohibitions by major trading partners creates unfair competition for American workers and businesses.

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The proposed tariffs are part of a wider package affecting 60 economies. While a group of countries, including Canada, the European Union, Mexico, and the United Kingdom, would face additional duties of 10%, India, China, Japan, South Korea, Brazil, and several others could be subject to the higher 12.5% rate. Certain products, including energy commodities, pharmaceuticals, rare earth materials, aircraft parts, and selected agricultural products, are expected to remain exempt from the proposed measures.

The development comes at a sensitive time, as India and the United States are simultaneously engaged in negotiations aimed at finalising an interim trade agreement and advancing a broader bilateral trade pact. Trade officials from both countries have been holding discussions to improve market access, address tariff concerns, and expand economic cooperation. Analysts note that the proposed duties could complicate negotiations, although both sides continue to express optimism about reaching a mutually beneficial agreement.

The USTR has invited public comments on the proposal until early July, with a public hearing scheduled thereafter. The final outcome will be closely watched by exporters and policymakers, as any additional tariffs could affect trade flows and business sentiment between the world’s two largest democracies.