US Trade Review Proposes Up to 12.5% Tariff on Imports from India and 59 Other Economies Over Forced Labour

The United States Trade Representative (USTR) has proposed new tariffs on imports from 60 economies, including India, China, Japan, the United Kingdom and the European Union, as per news reports.  

According to the USTR, the economies under review account for 99.4% of total US imports. The investigations assessed whether governments had introduced and enforced restrictions on goods produced wholly or partly with forced labour. 

The proposal follows investigations launched on March 12, 2026, under Section 301 of the Trade Act of 1974. 

India Included in Higher Tariff Category 

The USTR classified 54 economies, including India, China, Japan, South Korea, Vietnam and the UK, as jurisdictions that neither imposed nor effectively enforced prohibitions on forced labour-linked imports. 

In its findings on India, the agency stated that the country had failed to establish and enforce a forced labour import prohibition. The report added that such practices can affect trade by allowing lower-cost goods to enter global markets. 

Proposed Tariff Structure 

Under the proposal, economies that do not have prohibitions on forced labour-related imports would face an additional tariff of 12.5%.  

A lower rate of 10% has been proposed for countries that have legal restrictions in place but are considered to have weak enforcement. 

Canada, Ecuador, Indonesia, Mexico, Pakistan and the European Union were placed in the second category. The proposed measures are yet to be finalised. 

Focus on Labour Standards 

The USTR stated that goods produced using forced labour can distort market conditions and contribute to the circumvention of existing trade restrictions.  

The agency argued that the issue has implications for competition within international supply chains. The proposal forms part of broader efforts tied to labour standards, supply-chain monitoring and import controls linked to allegations of forced labour. 

Textile Provision and Next Steps 

The proposal also includes a separate mechanism for textile and apparel imports. Under this framework, a limited volume of such products from selected economies could qualify for lower tariff rates.  

The USTR has not identified the countries that may be covered. 

Read More: Maharashtra Cabinet Approves Farm Loan Waiver of Up to ₹2 Lakh Under New Debt Relief Scheme! 

Conclusion 

The proposed tariffs will undergo further consultation and review before any final action is announced. The decision could have implications for exporters across a range of economies, including India, depending on the final structure adopted by the US administration. 

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