The United States has hit upon a new way to impose a new tariff ranging from 10-12.5 per cent on 60-odd countries, including India, accusing them of failing to enforce a ban on foreign goods made with ‘forced labour’.
The proposal from the office of the United States Trade Representative (USTR) comes at a time when the US and India are engaged in talks to finalise an interim trade agreement in New Delhi.
Reacting to the proposed tariff measures, India’s commerce ministry said that New Delhi is currently engaged with the US on two Section 301 investigations, which relate to concerns over forced labour and excess industrial capacity.
The ministry added that these discussions are continuing in parallel with ongoing negotiations on an interim trade agreement between the two countries.
US ambassador to India Sergio Gor said last Friday that the trade deal would be concluded within the next few weeks and months, and only a percentage of the negotiation remains.
It remains to be seen how the two countries address the new tariff threat under Section 301, which, if approved, will create a new trade barrier that may be less vulnerable to legal challenges than Trump’s “reciprocal” tariffs that were unveiled in April 2025 and struck down by the US Supreme Court in February.
The 60 nations investigated cover 99.4 per cent of all US imports. The most affected are likely to be Mexico, Canada and China — the top three sources of US imports last year, according to the International Monetary Fund. India has been put under a 12.5 per cent tariff category, apart from China and other South Asian nations.
The tariffs are not yet final, and people can now submit comments to the USTR on the proposed action and apply to give testimony on the issue on July 7.
There is an apprehension that once the Section 122 tariffs, which were imposed soon after the Supreme Court annulled reciprocal tariffs, expire in late July, the Trump administration may look to announce the start of the new Section 301 tariffs.
The USTR is proposing to impose the new tariff depending on various criteria, including whether they have already struck a trade deal with the Trump administration. They also include countries such as India, which are close to finalising a deal.