US plans 12.5% tariff on Indian goods amid ongoing trade negotiations

The United States has proposed an additional tariff of 12.5% on imports from India, saying the country is among 60 economies that failed to curb imports made with forced labour, a move that could complicate ongoing bilateral trade negotiations in New Delhi.

The proposal was announced by the U.S. Trade Representative’s office on Tuesday, the second day of a three-day round of talks between Indian trade officials and a US delegation led by Assistant USTR Brendan Lynch.

In a 92-page report, the office said India “has failed to impose and effectively enforce a forced labour import prohibition”, describing the country’s policies as unreasonable and a burden on US commerce.

“The failure of our most important trading partners to address the importation of goods made with forced labour is unacceptable,” U.S. Trade Representative Jamieson Greer said.

“This creates a dynamic where American workers are forced to compete globally on an unlevel playing field.”

India’s commerce ministry did not immediately respond to a request for comment.

The proposal follows a Section 301 investigation into unfair trade practices as the Trump administration seeks to rebuild emergency tariffs that were struck down by the Supreme Court in February.

India was listed among 54 economies that do not have a forced-labour import prohibition and therefore face the higher proposed tariff.

Six other economies — Canada, Ecuador, the European Union, Indonesia, Mexico and Pakistan — have such prohibitions in place but face a lower proposed tariff of 10% because they are considered to have failed to enforce them effectively.

Ajay Srivastava, founder of the Global Trade Research Initiative, said the finding could be challenged because the USTR investigation was not focused on forced labour in Indian exports but on whether India prevented imports linked to forced labour from other countries.

“The proposed tariffs are viewed as part of broader U.S. pressure tactics, and India should treat Section 301 actions and the India–U.S. bilateral trade agreement negotiations separately,” he said.

According to Reuters, an Indian government source said New Delhi planned to raise the Section 301 investigation with Lynch’s team and seek tariff relief as part of the wider bilateral trade agreement discussions.

The USTR report also identified India as an intermediary in cotton supply chains linked to Chinese forced-labour inputs.