US proposes 12.5% tariff on India and other countries, Indian government says it ‘remains in touch’ with US
The US government has proposed imposing a 12.5% tariff on imports from 54 countries, including India, which it says have “failed to implement and effectively enforce” bans on imports of goods made using forced labour.
In response, the Indian government said it “remains in touch” with the US government regarding these developments as well as the finalization of the interim trade agreement.
In March of this year, the Office of the US Trade Representative opened an investigation under Section 301 of the US Trade Act of 1974 to determine whether its trading partners are taking sufficient steps to stop the importation of goods made with forced labor.
The latest tariff announcements under this investigation are not yet final. Countries, including India, can submit requests to participate in public hearings by June 22, submit written comments by July 6 and participate in public hearings on July 7.
‘will not tolerate’
According to trade experts, it was a tool for the US to impose tariffs on its imports after the US Supreme Court struck down reciprocal tariffs – including 50% on India – imposed by US President Donald Trump in February.
“The failure of our most important trading partners to address imports of goods made with forced labor is unacceptable,” US Trade Representative (USTR) Jamieson Greer said on June 2 in announcing the investigation’s findings. “This creates a dynamic where American workers are forced to compete globally on an uneven playing field. We will no longer tolerate this disparity,” he added.
Findings about India
According to a report issued by the ÚSTR, India is one of 54 countries investigated and found to have “failed to implement and effectively enforce” bans on the import of goods made with forced labour.
“The results of this investigation indicate that India’s actions, policies, and practices related to its failure to impose and effectively enforce a ban on forced labor imports are disproportionate and burden or restrict U.S. trade,” the report said.
As a result, the ÚSTR proposed a tariff of 12.5% on imports from these 54 countries. This puts India in the same tariff bracket as several of its competitors, including Bangladesh, China, Malaysia, Thailand and Vietnam.
The draft ÚSTR also includes a separate mechanism for textile and clothing products, under which a certain volume of imports from selected economies could enter the US at lower tariff rates.
According to Agneshwar Sen, head of trade policy at EY India, the impact of these tariffs on India could be multi-dimensional.
“In the near future, exporters in labour-intensive sectors such as textiles, garments, carpets, leather goods and brass goods could face at least an additional 10% Section 301 charges, adding to their existing tariff exposure,” Mr Sen said.
“Therefore, India should submit detailed written submissions by July 6 and actively participate in the public hearing on July 7 to challenge these findings,” he added.
“Stay in Touch with the US”
“India remains in discussions with the US on this matter under Section 301 proceedings,” the Department of Commerce and Industry said in a June 3 statement. “India is also concurrently involved in finalizing the framework agreement as announced on February 2, 2026 and in line with the joint statement released on February 7, 2026,” he added.
The US negotiating team, led by USTR Deputy Assistant Secretary Brendan Lynch, is currently in India on a three-day visit to New Delhi, which ends on June 4.
According to the Department of Trade and Industry, the purpose of the trip is to “finalize the details” of the interim agreement between the two countries and advance negotiations on a broader bilateral trade agreement (BTA).
According to Mr. Sen, negotiating a commitment even at a framework level that would ensure the absence of restrictions on the import of forced labor would be a strategically valuable outcome for India.
Tariffs in any way
According to trade experts, the Section 301 investigation is both a pressure tactic to get countries like India to move forward with a trade deal with the U.S. and a means to impose tariffs on U.S. imports one way or another.
“The Global Trade Research Initiative (GTRI) sees the 12.5% tariff as part of a broader effort by Washington to increase pressure on India through Section 301 investigations and tariffs,” GTRI said in a note. “India should be prepared for additional Section 301 tariffs in areas such as overcapacity.”
GTRI added that India should treat the BTA negotiations and the Section 301 investigation as separate matters, noting that the rationale for the BTA disappeared after the US Supreme Court’s February 20 decision to strike down the reciprocal tariff framework.
“The proposed BTA now appears increasingly one-sided, with India being asked to make significant concessions without getting any benefits in return,” GTRI added. “India should reconsider its participation and consider withdrawing from the BTA, as Malaysia has done,” the trade body said.
Mr. Sen went on to explain that the US administration is under increasing pressure to find an alternative to the 10% temporary tariff it imposed under Section 122 of the Trade Act for balance of payments reasons after the Supreme Court struck down reciprocal tariffs.
“The US Court of International Trade finds this rationale legally fragile and potentially inconsistent with WTO norms,” Mr Sen said. “In this context, the ‘forced labour’ approach provides a comparatively stronger legal basis for maintaining or even increasing equivalent rate levels,” he added.
Published – 03 Jun 2026 09:45 IST