U.S. proposes 12.5% tariff on India and other countries, Indian govt says it ‘remains engaged’ with U.S.
The U.S. government has proposed to levy a tariff of 12.5% on imports from 54 countries, including India, that it says have “failed to impose and effectively enforce” prohibitions on the import of goods produced using forced labour.
In response, the Indian government has said it “remains engaged” with the U.S. government regarding this development as well as the finalisation of an Interim Agreement on trade.
The office of the U.S. Trade Representative had, in March this year, launched an investigation under Section 301 of the U.S. Trade Act of 1974 to look into whether its trade partners were taking enough steps to stop the import of goods that are made using forced labour.
The latest tariff announcements, as part of this investigation, are not final as yet. Countries, including India, can submit requests to take part in public hearings by June 22, submit written comments by July 6, and participate in the public hearings on July 7.
‘Will not tolerate’
According to trade experts, this was a tool for the U.S. to impose tariffs on its imports after the U.S. Supreme Court in February struck down the reciprocal tariffs — including the 50% levied on India — that had been imposed by U.S. President Donald Trump.
“The failure of our most important trading partners to address the importation of goods made with forced labour is unacceptable,” U.S. Trade Representative (USTR) Jamieson Greer said on June 2, as part of the announcement of the investigation findings. “This creates a dynamic where American workers are forced to compete globally on an uneven playing field. We will no longer tolerate this disparity,” he added.
Findings on India
According to the report released by the USTR, India is one of the 54 countries that were investigated and that were found to have “failed to impose and effectively enforce” prohibitions on the import of goods produced using forced labour.
“The results of this investigation indicate that the acts, policies and practices of India related to the failure to impose and effectively enforce a forced labour import prohibition are unreasonable and burden or restrict U.S. commerce,” the report said.
As a result, the USTR has proposed a tariff of 12.5% on imports from these 54 countries. This puts India in the same tariff bracket as several of its competitors, including Bangladesh, China, Malaysia, Thailand, and Vietnam.
The proposal by the USTR also includes a separate mechanism for textile and apparel products, under which a certain volume of imports from selected economies would be allowed to enter the U.S. at lower tariff rates.
According to Agneshwar Sen, trade policy leader at EY India, the impact of these tariffs on India could be multidimensional.
“In the near term, exporters in labour-intensive industries such as textiles, garments, carpets, leather products, and brassware could face at least an additional 10% levy under Section 301, adding to their existing tariff exposure,” Mr. Sen said.
