Washington: The Office of the United States Trade Representative (USTR) on Wednesday proposed a 12.5% tariff on imports from India, placing it among 54 countries that, according to the agency, have not established or effectively enforced legal bans on goods produced wholly or partly through forced labour.
The proposal comes shortly after formal trade negotiations between India and the United States commenced on Tuesday.
According to the USTR, India was included in the higher-tariff category because it had neither implemented a legal prohibition on the import of goods linked to forced labour nor demonstrated effective enforcement of such restrictions.
In contrast, the agency proposed a lower tariff rate of 10% for countries and blocs including Pakistan, Canada, Ecuador, the European Union, Indonesia and Mexico, Indian Express reported.
The USTR indicated that these countries had shown a commitment to addressing imports linked to forced labour and had agreed, through a formal Agreement on Reciprocal Trade (ART) with the United States.
"Under Section 301 of the Trade Act of 1974 that the acts, policies, and practices of 60 economies related to the failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor is unreasonable and burdens or restricts U.S. commerce, and are thus actionable under Section 301(b) of the Trade Act," the statement read, IANS reported.
Ambassador Jamieson Greer said the failure of “our most important trading partners to address the importation of goods made with forced labor is unacceptable”.
“This creates a dynamic where American workers are forced to compete globally on an unlevel playing field,” Greer added.
“We will no longer tolerate this disparity. Some trading partners have taken initial steps to prevent the importation of forced labor goods, including through USMCA and commitments in Agreements on Reciprocal Trade. However, each of our trading partners must do more to ensure that trade does not perversely encourage and entrench forced labor globally,” he mentioned.
For economies that impose a forced labour import prohibition, that have committed to impose and enforce such a prohibition through an Agreement on Reciprocal Trade, or economies that have imposed a partial regime with the effect of preventing the importation of certain forced labour goods, the US Trade Representative proposes 10% as the rate of additional duties.
For all other economies, the US Trade Representative proposes 12.5 per cent as the rate of additional duty.
The USTR also proposes a textile mechanism that would allow for a certain volume of apparel and textile imports from certain economies to enter the United States at a reduced Section 301 tariff rate, said the statement.
The USTR will hold hearings about the proposed actions on July 7, 2026.
India was among the countries most affected by tariffs imposed under the International Emergency Economic Powers Act (IEEPA) before those tariffs were later declared illegal. Reports indicated that the measures contributed to an outflow of foreign investment and a sharp depreciation of the Indian rupee, which has reportedly lost nearly 12% of its value over the past year, Indian Express reported.
Negotiations on a formal trade agreement between India and the United States reportedly remained stalled for several months as Washington sought commitments from New Delhi to reduce imports of Russian oil and permit greater access for genetically modified American agricultural products.
However, a joint statement issued by the two countries in February indicated that India intended to eliminate or reduce tariffs on all US industrial goods as well as a broad range of American agricultural and food products. These included dried distillers’ grains (DDGs), red sorghum used for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine, spirits and several other products.
Subsequently, signs of differences emerged when the US revised a factsheet outlining the expected benefits of the trade discussions. The updated version reportedly softened language used in an earlier draft and removed an entire section relating to digital services taxes.
While the original document stated that India had “committed to” increasing purchases of American goods and acquiring more than $500 billion worth of US energy, information and communication technology products, coal and other commodities, the revised version changed the wording to say that India “intends” to do so. Similar language appeared in the joint statement.
Speaking at a press conference on Monday during the announcement of the operationalisation of the free trade agreement with Oman, Commerce Minister Piyush Goyal said negotiations with the United States were largely complete and that both sides had already agreed on the first tranche of a framework agreement. He added that discussions would continue toward a broader bilateral trade pact and said he expected to meet USTR Jamieson Greer later in the month.