U.S. Proposes Fresh Tariffs on India and 59 Other Economies Over Forced-Labour Compliance Concerns

The United States has proposed a new round of import tariffs targeting several major trading partners, including India, following an investigation into the enforcement of restrictions on goods allegedly produced through forced labour. Under the proposal, Indian exports could face an additional 12.5% tariff.

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The move was announced by the Office of the United States Trade Representative (USTR) on June 3. The agency said multiple economies had not imposed or effectively enforced measures to prevent the import of goods linked to forced labour, prompting the proposed trade action.

India Among Economies Facing Higher Tariff Rate

According to the USTR, 54 economies were identified as having failed to establish and enforce effective prohibitions on imports associated with forced labour practices. Countries in this category, including India, China, Vietnam, Taiwan, and the United Kingdom, could be subjected to a 12.5% tariff on affected imports entering the U.S.

The USTR also identified six economies, Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan, as jurisdictions that had not effectively enforced existing prohibitions. Imports from these regions would be subject to a lower proposed tariff rate of 10%.

The proposed measures form part of a broader U.S. effort to strengthen trade enforcement mechanisms and address concerns regarding labour standards in international supply chains.

U.S. Trade Officials Outline Rationale

In a statement released by the USTR, U.S. Trade Representative Jamieson Greer said the failure of major trading partners to adequately address imports linked to forced labour creates unfair competition for American workers.

The U.S. administration stated that while some countries have taken preliminary steps through trade agreements and bilateral commitments, additional action is required to prevent forced-labour-linked products from entering global markets.

Certain Products Excluded

The proposed tariff framework includes several exemptions. Additional duties would not apply to items such as beef, coffee and selected fruits and nuts.

Goods imported from Canada and Mexico that comply with the North American Free Trade framework would also remain exempt. Certain textile and apparel products are similarly excluded under the proposal.

Sectors That Could Be Impacted

The proposed 12.5% U.S. import tariff could severely impact India’s highly labor-intensive and export-reliant industries, with small-and-medium enterprises (MSMEs) facing the heaviest potential fallout. Industries vulnerable to a sharp drop in U.S. demand include textiles and apparel, gems and jewelry, leather, footwear, and marine products, alongside margin pressures on auto components, chemicals, and machinery.

However, critical sectors like pharmaceuticals, electronics, and energy are expected to remain unaffected, as certain product lines have been excluded from the proposed framework to safeguard essential American supply chains.

Consultation Process Underway

The USTR has invited public comments on the proposed tariffs until July 6. Public hearings under the Section 301 process are scheduled to begin on July 7, before any final decision is taken.

The latest proposal follows new trade investigations launched by U.S. authorities after a court ruling earlier this year affected a broader set of tariff measures. In addition to the forced-labour inquiry, U.S. trade officials have also initiated investigations related to industrial overcapacity.

The results of the consultative process will be decisive for determining the scope, tariffs, and timing of implementation of the measures that may have implications for trade among the U.S. and other major world economies such as India.