The US Imposes 10 Pc Tariff on Indian Goods for 'Forced Labour'

Chennai:The US has imposed a 10 per cent tariff on India for failing to prohibit imports of goods produced with forced labour. The new tariff will replace the 10 per cent tariff from Friday imposed under Section 122 on all countries. While Section 301 tariff on excess capacity is yet to be announced, the TRQ quota on Indian textiles has been taken away.

The US had earlier proposed a 12.5 per cent Section 301 tariff for forced labour. However, this has been brought down to 10 per cent.

“The United States has had a forced labour import ban for nearly a century, and rigorously enforces it; it’s well past time for our trading partners to do the same,” said Ambassador Jamieson Greer.

The new tariffs taking effect on July 24, 2026, will replace the 10 per cent global tariff under Section 122, which expires the same day.

The tariff has been imposed on the imports from 60 economies, of which 17 economies, including India, Canada, the United Kingdom, Bangladesh and Pakistan, will face a 10% tariff, while the remaining 43 economies will be subject to a 12.5% tariff.

According to the US Trade Representative, India has adopted a forced labour import prohibition after the US’ notice issued on July 5.

“The 10% U.S. tariff on Indian exports under the forced-labour investigation lacks a credible factual basis. The United States has not produced evidence that India imports goods made with forced labour. In response to U.S. concerns, India has already amended its Foreign Trade Policy to ban the import of goods produced using forced or compulsory labour. Indian law also prohibits forced labour in domestic production through constitutional guarantees and labour statutes. The tariff therefore appears to serve primarily as a mechanism to preserve the Trump administration's tariff wall after the expiry of the temporary Section 122 tariffs,” said GTRI.

While the tariff remains the same, India has not received the textile and apparel tariff-rate quota (TRQ) exemption under the new U.S. Section 301 forced-labour tariff. The exemption is however available to specified volumes of textile and apparel exports from Bangladesh, Cambodia, Indonesia, and Malaysia that use U.S.-origin cotton and fibre.

The new tariffs exempt raw materials and agricultural inputs that the United States cannot produce in sufficient quantities, products whose taxation could cause inflation or supply disruptions, selected industrial inputs including certain plastic resins, medical supplies and metal products, goods already subject to Section 232 tariffs, and informational or humanitarian items such as books, personal baggage and donations.

The US may soon announce the results of Section 301 investigation into excess manufacturing capacity, which could lead to additional tariffs on a wide range of industrial products.