Winning Bizness Desk
Mumbai.Washington DC - The United States has imposed a fresh 10% tariff on goods imported from India from Friday under Section 301 of the US Trade Act of 1974, citing concerns linked to products associated with forced labour. The move comes on the very day the Trump administration's temporary 15% global tariff regime comes to an end, effectively replacing the outgoing measure with a new country-specific duty.
The decision forms part of a broader trade action affecting 60 countries, with Washington introducing additional tariffs ranging between 10% and 12.5%, depending on each country's compliance with labour-related standards. India has been placed in the 10% category after the US acknowledged steps taken to strengthen labour oversight and supply chain monitoring.
Sixty countries covered under new tariffs
According to the US notification, 17 countries have been subjected to an additional 10% tariff, while another 43 nations will face a 12.5% levy. India shares the 10% bracket with the UK, Canada, Bangladesh, Indonesia, Mexico, Pakistan and Sri Lanka.
Key highlights include:
- The tariff has been imposed under Section 301 of the Trade Act, 1974.
- It is linked to concerns over goods produced using forced labour.
- The earlier temporary 15% global tariff expired on the same day.
- The new levy is intended as a long-term trade measure rather than a temporary one.
Sub-head: Export sectors likely to feel pressure
The United States remains India's largest export market, making the latest tariff significant for several export-oriented industries. Products from sectors heavily dependent on American buyers could become more expensive, potentially affecting their competitiveness.
The sectors expected to face the greatest impact include textiles and garments, gems and jewellery, leather products, agriculture and food items, engineering goods, chemicals and selected manufacturing products. Higher landed prices may encourage American buyers to shift to suppliers in other countries or push Indian exporters to reduce prices to retain market share.
Sub-head: Why India avoided a steeper levy
The US had initially proposed a 12.5% tariff on Indian imports. However, the rate was reduced to 10% after India introduced policy changes relating to labour standards and foreign trade, alongside sustained discussions with Washington.
According to the federal note, India amended its Foreign Trade Policy on June 14 following the tariff proposal announced earlier in June. The US recognised improvements in labour rights monitoring, regulatory compliance and supply chain transparency, leading to a 2.5 percentage point reduction in the proposed tariff.
Key takeaways:
- India secured a lower tariff than originally proposed.
- Labour reforms and policy amendments influenced the decision.
- Supply chain transparency was cited as a positive development.
- The US expects further strengthening of labour enforcement.
Understanding forced labour and Section 301
Forced labour refers to situations where individuals are made to work against their will through threats, debt, violence, confiscation of documents, withholding of wages or restrictions on leaving employment. The International Labour Organization considers it a serious violation of human rights.
Section 301 of the US Trade Act empowers the American government to take action against countries whose trade practices are considered unfair, discriminatory or harmful to US businesses. The Office of the United States Trade Representative conducts investigations before measures such as tariffs, import restrictions or other trade penalties are approved by the President.
Similar action taken against other countries
The US has invoked forced labour-related trade measures against several countries in recent years. China has faced some of the toughest restrictions, particularly on products linked to the Xinjiang region, including cotton, tomatoes, solar panels and related goods.
Other industries that have remained under American scrutiny include seafood, palm oil, rubber, cocoa, textiles and mining. While India's tariff has been moderated compared with the original proposal, the latest decision signals that Washington intends to keep labour standards and supply chain compliance at the centre of its future trade policy.
