In a significant trade policy development, US President Donald Trump has announced a 10 per cent tariff on goods imported from India and 16 other economies under Section 301 of the Trade Act of 1974, citing efforts to combat the use of forced labour in global supply chains. The move comes after Washington acknowledged India's recent amendment to its foreign trade policy prohibiting the import of goods produced using forced labour, resulting in a lower tariff rate than initially proposed.
Last month, the United States had proposed imposing a 12.5 per cent tariff on imports from India under the same framework. However, the reduction to 10 per cent reflects the US administration's recognition of New Delhi's policy changes aimed at strengthening compliance with international labour standards.
In a memorandum issued on Thursday, President Trump said the decision followed recommendations from the Office of the US Trade Representative (USTR).
"As a result of these actions, the Trade Representative has advised me that the goods of these economies should be tariffed at the 10 per cent rate to further encourage these economies to effectively enforce such prohibitions," Trump said.
The announcement is part of a broader action targeting 60 economies under Section 301 of the Trade Act. US Trade Representative Jamieson Greer unveiled the final tariff structure on Thursday, just a day before the expiration of the temporary 10 per cent additional import tax that had applied to all countries.
Under the new tariff regime, 17 economies—including India, Canada, the United Kingdom, Bangladesh and Pakistan—will face a 10 per cent tariff. The remaining 43 economies will be subject to a higher 12.5 per cent duty due to the absence of adequate laws or enforcement mechanisms prohibiting goods produced with forced labour.
Countries such as China, Japan and the United Kingdom, which the US says do not have sufficiently effective laws barring the import of goods produced using forced labour, will be among those facing the higher 12.5 per cent tariff rate.
The USTR clarified that the tariffs are intended to encourage governments to adopt and effectively enforce measures preventing forced labour in international trade. According to the agency, the action was taken at President Trump's direction following a review under Section 301 of the Trade Act of 1974.
"The action will begin to correct what is both a human rights abuse and a distortive trade practice to improve the welfare of workers everywhere," Greer said in a statement.
The Federal Register notice accompanying the decision specifically acknowledged India's policy response following the release of the proposed tariffs in June. It noted that India had adopted a prohibition on the import of goods produced using forced labour, a step that contributed to the lower tariff rate.
The latest tariffs are scheduled to take effect at 12:01 am on Friday, coinciding with the expiration of the temporary 10 per cent import tax imposed after a February Supreme Court ruling invalidated President Trump's "Liberation Day" tariffs introduced in April 2025.
The US administration has also outlined several exemptions to the new tariff regime. The forced labour tariffs will not apply to raw materials where domestic supply in the United States would become unavailable. Exemptions have also been provided for products whose restricted import could cause economy-wide disruptions or for items that cannot be produced or cultivated in sufficient quantities within the US.
The latest move highlights the Trump administration's continued use of trade policy as a tool to address labour rights concerns while encouraging trading partners to strengthen their regulatory frameworks. For India, the reduction from the initially proposed 12.5 per cent tariff to 10 per cent signals that policy reforms aimed at addressing forced labour concerns have been recognised by Washington, even as Indian exports will continue to face additional duties under the new framework.
The development is expected to be closely watched by exporters and policymakers in both countries, particularly as India and the United States continue discussions on expanding bilateral trade while navigating evolving trade regulations and supply chain standards.
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