US Proposes 12.5% Tariffs on India Over Forced Labour Imports

The Office of the US Trade Representative proposed 12.5 per cent additional duties on 54 countries, including India, for failing to prohibit the import of goods produced with forced labour.

Official findings released Wednesday determined the failure of 60 economies to effectively enforce prohibitions constitutes an "unreasonable" practice that burdens US commerce. The investigations and proposed duties are actionable under Section 301(b) of the Trade Act of 1974.

The action follows broad investigations launched against 60 countries regarding their failure to impose and effectively enforce bans on imports made with forced labour.

"The failure of our most important trading partners to address the importation of goods made with forced labour is unacceptable. This creates a dynamic where American workers are forced to compete globally on an unlevel playing field,” US Trade Representative Ambassador Jamieson Greer said in a statement.

Tariff rates and targets

The 54 countries failing to impose and effectively enforce prohibitions include India, China, Japan, Brazil, Australia, the UK and Saudi Arabia. Six other economies — Canada, Ecuador, the European Union, Indonesia, Mexico and Pakistan — failed to effectively enforce existing prohibitions.

The USTR proposed a 10 per cent additional duty for economies that impose prohibitions, have commitments via an Agreement on Reciprocal Trade, or have partial regimes preventing certain forced labour imports. "For all other economies, the US Trade Representative proposes 12.5 per cent as the rate of additional duty,” a USTR statement said.

"We will no longer tolerate this disparity," Greer said.

While some nations have taken initial steps to prevent the importation of forced labour goods, including through USMCA and commitments in Agreements on Reciprocal Trade, "...each of our trading partners must do more to ensure that trade does not perversely encourage and entrench forced labour globally," Greer said.

India's response and hearings

India denied the allegations under the forced labour clause and asked the US to end the investigations. Indian officials requested addressing such matters within the framework of ongoing bilateral trade negotiations.

To mitigate certain supply chain impacts, the USTR proposed a specialised textile mechanism. This provision would allow a specific volume of apparel and textile imports from selected economies to enter the US at a reduced tariff rate.

The agency set a June 22 deadline for hearing requests and testimony summaries, followed by a July 6 deadline for written comments. "USTR will hold hearings about the proposed actions in these investigations on July 7," the statement said.