Last Updated:
The Office of the United States Trade Representative said it had found that the policies and practices of 60 economies were “unreasonable and burden or restrict US commerce”
India and the US are in the middle of negotiating a bilateral trade agreement aimed at expanding market access and reducing trade barriers.
Just days after India and the United States resumed talks on a proposed trade agreement, Washington has thrown a fresh curveball into the negotiations.
The Office of the United States Trade Representative (USTR) has proposed an additional 12.5 per cent tariff on imports from India, placing New Delhi in a group of countries facing higher duties under a new Section 301 investigation into forced labour-linked supply chains.
In a statement issued on Tuesday, the USTR stated that it had determined under Section 301 of the Trade Act of 1974 that the acts, policies and practices of the 60 economies were “unreasonable and burden or restrict US commerce”.
The move has raised an obvious question: why is India facing a 12.5 per cent tariff while some other countries are being hit with only 10 per cent?
What Has The USTR Found?
The USTR concluded a months-long investigation under Section 301 of the US Trade Act of 1974, examining whether major trading partners had adopted and effectively enforced measures to prevent the import of goods produced using forced labour.
According to the findings released on June 3, 60 economies were found to have shortcomings in addressing forced-labour concerns in global supply chains. The Trump administration argues that such failures create an unfair competitive advantage over American producers and workers, Reuters said.
Why 12.5% For India?
The distinction lies in how the USTR has categorised countries.
Under the proposal, a group of economies, including Canada, the European Union, Mexico, Indonesia, Malaysia, Taiwan and the United Kingdom would face a 10 per cent tariff because they have either full or partial prohibitions against the import of goods made with forced labour.
India, however, has been placed in the category facing a 12.5 per cent tariff, alongside countries such as China, Japan, South Korea, Brazil and Switzerland. According to the USTR, these countries do not have sufficiently effective prohibitions or enforcement mechanisms to prevent forced labour-linked goods from entering supply chains.
According to The Economic Times, the proposed tariff structure is not based on trade deficits or reciprocal tariff rates this time. It is tied to the USTR’s assessment of labour-related enforcement standards.
How Does This Relate To The Existing 10% Tariff?
India currently faces a temporary 10 per cent baseline tariff that was imposed on virtually all US trading partners after the US Supreme Court struck down an earlier tariff regime introduced under emergency powers. That 10 per cent levy is scheduled to remain in place until around July 24 unless replaced or modified.
The newly proposed 12.5 per cent duty would come under a different legal route—Section 301—and is therefore separate from the existing baseline tariff framework.
Can India Avoid The New Tariff?
The proposal is not yet final. The USTR has opened a public comment period until July 6 and plans to hold a hearing on July 7 before taking a final decision.
The ongoing India-US trade negotiations could also alter the outcome. Reuters has reported that one of India’s key objectives in the current talks is obtaining relief from Section 301-related tariffs. Some reports suggest Washington may refrain from imposing additional duties if an interim trade agreement is concluded before the July deadline.
What Does This Mean For India?
The timing is awkward for New Delhi.
India and the US are in the middle of negotiating a bilateral trade agreement aimed at expanding market access and reducing trade barriers. Washington has repeatedly flagged India’s tariff structure, agricultural restrictions, digital regulations and market-access rules as concerns.
Now, the forced-labour investigation adds another layer of pressure.
For Indian exporters, the immediate impact remains uncertain because the tariff proposal is still under review. But the USTR’s decision to place India in the higher 12.5 per cent bracket sends a clear signal that labour compliance and supply-chain transparency have become central issues in Washington’s trade agenda, ET reported.
The next few weeks of negotiations may determine whether India remains in that category or secures an exemption before the proposed tariffs take effect.
About the Author
Apoorva Misra is News Editor at News18.com with over nine years of experience. She is a graduate from Delhi University’s Lady Shri Ram College and holds a PG Diploma from Asian College of Journalism, …Read More
Read More
Source link
[ad_3]
