India must challenge USTR’s proposed 12.5% tariff on India in Sec 301 investigation: GTRI
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The proposed 12.5% tariff on India by the US Trade Representative (USTR) under its Section 301 investigation goes beyond the scope of that provision and New Delhi should challenge the scope of the probe, think tank GTRI said on Wednesday (Jun 3, 2026).
The 12.5% tariff exceeds the US WTO commitment.
The U.S. trade representative proposed imposing 12.5% additional tariffs on 54 countries, including India, for failing to ban imports of goods made with forced labor.
The action follows investigations launched against 60 countries over what the ÚSTR described as their failure to impose and effectively enforce bans on forced labor imports.
“The current investigation goes beyond the scope of Section 301, which looks at market access barriers faced by US firms in the country under investigation, not what they import and from where,” the Global Trade Research Initiative (GTRI) said.
She added that the investigation is not based on claims that Indian exports are produced using forced labour. Rather, USTR’s action focuses on whether countries prohibit imports made with forced labor in third countries.
GTRI founder Ajay Srivastava said India must argue that the United States is trying to impose its preferred import control framework on other countries through unilateral trade measures that do not fall under Section 301.
“India can also argue that concerns about forced labor, particularly in countries like China, are often product-specific and that the United States itself remains a major importer of many of the affected products. Broad country-wide tariff measures are therefore an inappropriate response when the problem could be limited to a few products,” he said.
GTRI also sees the tariffs as part of a broader effort by Washington to increase pressure on India as the two sides negotiate a bilateral trade deal.
India should be prepared for additional Section 301 duties in areas such as overcapacity, he said.
On March 11 and 12, 2026, the Office of the United States Trade Representative (USTR) opened two separate Section 301 investigations involving 60 economies regarding concerns related to forced labor and industrial overcapacity.
The ÚSTR has now published its findings as part of the forced labor investigation and proposed additional tariffs on imports from 54 economies.
The proposal includes a 10% tariff on imports from Canada, Ecuador, the European Union, Indonesia, Mexico and Pakistan, and a 12.5% tariff on imports from another 48 economies, including India and China.
Pakistan and Indonesia are India’s competitors on the trade front.
The measure remains a draft and has not yet been finalized.
Lower rates have been proposed for textiles, although specific rates have not yet been finalized.
The proposal has now entered the consultation phase. Interested parties may submit requests to participate in the hearing and summaries of testimony until June 22, 2026, with written comments due by July 6.
ÚSTR has a hearing scheduled for July 7.
A final decision is expected in late June or July, potentially before the temporary Section 122 tariffs (10%) expire on 24 July 2026.
Once finalized, the tariffs could go into effect almost immediately.
The investigation is not based on allegations that Indian exports use forced labour, but on whether India restricts imports involving forced labor in third countries.
Published – 03 Jun 2026 12:54 IST