Washington’s latest trade salvo has landed just as an older set of tariffs was set to expire, and India has emerged with a more favourable outcome than many of its trading peers. Under a fresh enforcement order from President Donald Trump, dozens of countries are being hit with new duties tied to forced labour practices in global supply chains, and India has been placed in the lower tariff bracket rather than the steeper one.
What the New Tariff Order Says
The US Trade Representative Jamieson Greer announced new tariffs on 60 economies under Section 301 of the Trade Act, with the action taking effect just a day before an existing temporary 10 per cent levy on all countries was due to expire. That earlier flat tariff had been put in place after the US Supreme Court struck down the administration’s sweeping reciprocal tariffs in February, prompting a temporary 10 per cent charge on all countries for 150 days.
The new duties are split into two tiers. Countries seen as failing to enforce bans on goods made with forced labour face a 12.5 per cent tariff, while those with such bans in place, including India, face 10 per cent. In total, the new rates cover 60 economies accounting for roughly 99.4 per cent of US imports, with certain goods such as oil, gas, fertiliser and select food items exempted.
Explaining the rationale, Trump said in a memorandum that the goods of these economies should be tariffed at the 10 per cent rate to further encourage effective enforcement of forced labour prohibitions. Greer went further, describing the action as correcting both a human rights abuse and a distortive trade practice affecting workers globally.
Why India Landed in the Lower Bracket
India’s placement in the softer tariff tier was not automatic. When the US first proposed these tariffs under Section 301, India was initially bracketed among countries facing the higher 12.5 per cent levy, but Washington later took note of an amendment New Delhi made to its foreign trade policy prohibiting the import of goods produced through forced labour. That policy change is understood to have shifted India into the lower-duty category alongside Argentina, Bangladesh, Britain, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka and Trinidad and Tobago.
Trade watchers see the outcome as more symbolic than substantive in dollar terms. Abhik Sengupta, a programme officer with an industry body, noted that the reduction from 12.5 per cent to 10 per cent is modest in percentage points but significant in signalling, suggesting Washington is willing to calibrate enforcement while preserving the strategic trajectory of the India-US economic partnership. On its part, India has contested the USTR’s investigations and maintained that such issues should instead be resolved through the ongoing bilateral trade agreement negotiations.
The move has also drawn pushback abroad. Norway has said there is no basis for the tariff since it already has rules preventing trade in forced-labour goods, while Australia and Brazil have also criticised the measure. Meanwhile, officials in Washington are already signalling more may be coming: reports suggest another round of tariffs targeting countries accused of subsidising excess factory output could follow within weeks, as the administration continues rebuilding a tariff structure on firmer legal footing after February’s Supreme Court setback.