India Engages US Over Proposed 12.5% Tariff Linked to Forced Labour Concerns Across 54 Nations
Tariff: The Commerce Ministry has stated that India is closely monitoring the US's proposed Section 301 tariffs and is in constant dialogue with the US administration on this issue. According to the ministry, the two countries are also simultaneously negotiating to finalize an interim trade agreement.
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“India Engages US Over Proposed 12.5% Tariff Linked to Forced Labour Concerns Across 54 Nations”
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3 Jun 2026
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India Engages US Over Proposed 12.5% Tariff Linked to Forced Labour Concerns Across 54 Nations
The Indian Government has answered the move made by the United States to impose additional tariffs up to 12.5 percent on goods from 54 countries including India, due to concerns raised regarding the issue of forced labor. As per the official statement released by the government, the Indian government maintains constant communication with the United States concerning this matter. According to the statement released by the Ministry of Commerce, India continues to engage with the United States over Section 301 and also the interim trade agreement.
The United States Trade Representative (USTR) has come up with the idea of imposing an additional tariff of up to 12.5 percent on goods from 54 economies, including India. The proposal is under consideration, and the comments can be sent until July 6. There is a hearing planned for July 7.
According to the USTR's proposal, these additional duties could replace or be added to the currently applicable 10 percent temporary tariff. This 10 percent duty was imposed under Section 122 of the US Trade Act, which is set to expire on July 24th.
Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), believes that India should challenge the legal validity of this US action. He stated that this investigation is different from traditional Section 301 cases.
According to Srivastava, the US is not alleging that Indian products are made with forced labor. Rather, the USTR's argument is that countries like India do not adequately restrict the import of goods produced with forced labor in a third country.
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He said that India should argue that the US is attempting to impose its import control regime on other countries through unilateral trade measures. Furthermore, if there are concerns about a specific product or sector, imposing tariffs on the entire country should be considered disproportionate.
GTRI has described the proposed 12.5 percent tariff as part of a broader US strategy to increase pressure on India. Ajay Srivastava says that Washington could use the Section 301 investigation and tariffs to exert pressure in ongoing trade negotiations with India. He suggested that India should view the Bilateral Trade Agreement (BTA) negotiations and the Section 301 investigation as separate issues and be prepared to oppose any punitive action.
Agneshwar Sen, Trade Policy Leader at EY India, believes that this action by the USTR comes at a time when the US administration is seeking a strong legal basis to maintain the current tariff regime.
He said that the 10 percent tariff imposed under Section 122 of the Trade Act is facing legal challenges in the US Court of International Trade and is considered inconsistent with World Trade Organization (WTO) rules. In such a situation, the ground of "forced labor" could provide the US with a relatively strong legal basis to maintain similar or higher tariffs.
Experts believe that India should submit detailed objections and legal arguments to the US administration before the July 6 deadline. It should also actively participate in the public hearing on July 7 to challenge the USTR's findings.
According to Agneshwar Sen, the ongoing bilateral trade agreement negotiations between India and the US are an important opportunity for India. India can use this platform to obtain exemptions or reduce proposed tariffs.
It is noteworthy that India and the US are currently engaged in intensive negotiations regarding a bilateral trade agreement. Discussions are ongoing between the two countries on market access, tariffs, agriculture, and other trade issues. The US trade delegation is in New Delhi from June 1 to June 4, and both sides are attempting to resolve disputes related to the trade agreement as well as tariffs.
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