India Could Be Hit With Fresh 12.5% US Tariff Amid Forced Labour Trade Probe

India is among a large group of countries that could soon face additional tariffs from the United States after a US investigation concluded that many trading partners are not doing enough to prevent the import of goods produced using forced labour.

The Office of the United States Trade Representative (USTR) has proposed fresh import duties under Section 301 of the US Trade Act of 1974, following a months-long investigation into the trade practices of 60 economies. The move is part of Washington's broader effort to address what it describes as unfair trade conditions that disadvantage American workers and businesses.

India Falls Into Highest Tariff Category

According to the USTR's findings, India is one of 54 economies that neither maintain nor effectively enforce a comprehensive ban on imports linked to forced labour. As a result, products shipped from these countries to the US could attract an additional tariff of 12.5%.

The list includes several major US trading partners such as China, Japan, South Korea, the United Kingdom, Australia, Brazil, Saudi Arabia, Singapore, Switzerland, Thailand, Vietnam and the United Arab Emirates.

If implemented, the tariff would be levied on top of existing import duties, potentially affecting the competitiveness of exports from these countries in the American market.

Some Nations Face Lower 10% Duty

The USTR has proposed a lower tariff of 10% for countries that have already introduced forced labour import restrictions or committed to doing so through trade agreements, but are considered to be weak in enforcing those measures.

This category includes Canada, the European Union, Mexico, Indonesia, Ecuador and Pakistan. The agency said these economies have legal frameworks in place but have not demonstrated adequate enforcement.

Trump's Administration Seeks New Tariff Route

The proposal comes as President Donald Trump's administration explores alternative methods to impose trade penalties after a recent US Supreme Court ruling limited the executive branch's ability to introduce broad tariffs without congressional approval.

Trade experts view the Section 301 investigations as a way for the administration to establish a stronger legal foundation for future tariff actions.

The forced labour probe is one of the most significant investigations launched under this approach and could reshape trade relations with several major economies if the recommendations are adopted.

US Says American Workers Need Protection

US Trade Representative Jamieson Greer said the widespread failure to curb imports tied to forced labour has created unfair competition for US industries.

According to the USTR, products manufactured under forced labour conditions can enter global markets at artificially low costs, placing pressure on businesses and workers operating under stricter labour standards.

The proposed tariffs are intended to reduce those distortions and encourage stronger enforcement measures across international supply chains.

India Rejects Findings, Calls for Probe to End

India has opposed the investigation from the outset and has formally challenged its basis before the USTR.

In its submission, India argued that the probe did not satisfy the legal conditions required under Section 301 and requested that the investigation be terminated. New Delhi also urged US authorities to issue a negative determination while reiterating its willingness to continue discussions with Washington on trade-related matters.

Several Products Could Remain Exempt

Despite the proposed tariff hikes, the USTR has outlined a number of exemptions.

Imports of products such as beef, coffee and selected fruits and nuts may not be subject to the additional duties. Goods traded under the North American free trade framework between the US, Canada and Mexico are also expected to remain exempt, along with certain textile and apparel categories.

Public Hearings Scheduled For July

The proposal is currently open for public consultation before any final decision is taken.

Interested stakeholders must submit requests to participate in hearings by June 22, while written comments can be filed until July 6. Public hearings are scheduled to begin on July 7.

The final outcome of the process will determine whether India and the other affected economies face the proposed additional tariffs of 12.5% and 10%, potentially creating a new source of uncertainty for global trade and export-oriented industries.