The United States Trade Representative (USTR) has proposed a fresh tariff of 12.5% on imports from India, alleging that the country has not adequately implemented or enforced restrictions on goods produced through forced labour. The proposal was announced at a time when India and the United States have formally begun negotiations on a bilateral trade agreement.
According to the USTR, India has failed to establish and effectively enforce a legal prohibition on imports linked to forced labour. The agency argued that this failure places burden on US commercial activities. In its findings, the USTR stated that India’s policies and practices related to the enforcement of restrictions on forced labour-linked imports are considered unreasonable and have an adverse impact on American commercial interests.
The proposed measures are currently under a public consultation process. Written comments on the proposal can be accepted until July 6, 2026, while a public hearing is scheduled for July 7, 2026. If approved, the tariffs could take effect as early as July 7.
While India faces a proposed tariff rate of 12.5%, the USTR has recommended a lower 10% tariff for Pakistan, Canada, Ecuador, the European Union, Indonesia and Mexico. The agency said these countries have demonstrated a commitment to addressing imports connected to forced labour and have agreed to implement and enforce relevant restrictions through a formal Agreement on Reciprocal Trade (ART) with the United States.
Trade experts warned that the tariffs imposed under Section 301 could have a greater impact than those previously introduced under the International Emergency Economic Powers Act (IEEPA).
India had previously faced significant tariffs under the IEEPA framework following difficulties in trade negotiations. Experts suggest that the latest proposal could add further complexity to ongoing discussions between the two countries as they work toward a comprehensive trade agreement.