TradePolicy – India Receives Lower US Tariff After Forced Labour Import Measures
TradePolicy- India has secured a lower tariff rate under the latest trade enforcement measures introduced by the Donald Trump administration after the United States concluded that New Delhi had taken steps to prohibit imports linked to forced labour. As a result, India will face a 10 per cent tariff under the new Section 301 action, placing it among a limited group of countries receiving more favourable treatment than many other major US trading partners.
US Announces New Tariff Framework
The Office of the US Trade Representative (USTR) announced that the new tariff measures target 60 economies that, according to Washington, have either failed to ban or effectively enforce restrictions on goods produced through forced labour. Directed by President Donald Trump, the revised duties came into effect on July 24, with tariff rates ranging between 10 per cent and 12.5 per cent depending on each country’s regulatory framework.
India joins a group of 17 economies that qualify for the lower 10 per cent tariff. Other countries in this category include Bangladesh, Canada, Indonesia, Malaysia, Mexico, Pakistan, Sri Lanka and the United Kingdom.
Policy Changes Help India Secure Better Category
According to the USTR, India improved its position after introducing a prohibition on imports produced through forced labour during the course of the US investigation. The agency noted that this policy change occurred after its proposed enforcement action was published in June, allowing India to move into the lower tariff category before the final decision was announced.
Several other countries, including Cambodia, Guatemala, Honduras, Sri Lanka, and Trinidad and Tobago, also introduced similar import restrictions while the investigation was underway. Jordan likewise committed to implementing comparable measures through its Agreement on Reciprocal Trade.
US Says Action Targets Human Rights and Fair Trade
US Trade Representative Jamieson Greer said the decision reflects the Trump administration’s view that decades of diplomatic efforts have failed to eliminate forced labour from international supply chains. He stated that the United States has maintained and enforced a ban on such imports for many years and believes its trading partners should adopt comparable standards.
Greer added that the latest enforcement action is intended to address both labour rights concerns and trade practices that distort fair competition, while encouraging governments to strengthen enforcement of import restrictions involving forced labour.
Investigation Covered 60 Trading Partners
The Section 301 investigations began on March 12 and examined the policies of 60 economies. The review process included two rounds of public hearings, consultations involving more than 45 governments, over 2,100 public submissions and testimony from more than 100 witnesses.
On June 2, the USTR concluded that the trade practices of all 60 economies under review placed an unreasonable burden on US commerce, making them subject to action under Section 301 of the Trade Act of 1974.
Higher Tariffs for Several Major Economies
While India received the lower tariff rate, many other economies—including China, Australia, Brazil, Saudi Arabia, the United Arab Emirates, Vietnam and South Africa—will face tariffs of 12.5 per cent. Meanwhile, the European Union, Japan, South Korea, Switzerland and Taiwan will be assessed under a separate calculation that takes existing Most-Favoured-Nation duty rates into account.
The USTR also announced exemptions covering selected raw materials, pharmaceutical products, semiconductor manufacturing equipment and other items considered essential to domestic supply chains. In addition, tariff-rate quotas will be introduced for Bangladesh, Cambodia, Indonesia and Malaysia to encourage imports using US textile and cotton inputs.
According to the USTR, the 60 economies covered by the action account for approximately 99.4 per cent of total US imports. The agency described the move as part of a broader effort to reduce forced labour in global supply chains while encouraging trading partners to adopt import restrictions similar to those already enforced by the United States.