The United States has imposed new tariffs of 10% on imports from India and 16 other countries following a months-long investigation into their efforts to prevent goods produced with forced labour from entering global supply chains. The tariffs, implemented under Section 301 of the US Trade Act of 1974, took effect after the expiration of the Trump administration’s temporary global tariff regime, with Washington arguing that the affected countries have not done enough to enforce bans on imports made using forced labour.
India, Pakistan, Bangladesh, the United Kingdom, Canada, Mexico, Malaysia, Indonesia, Sri Lanka, Argentina, Cambodia, Ecuador, El Salvador, Guatemala, Honduras, Jordan, and Trinidad and Tobago were among the countries subjected to the 10% tariff. The US Trade Representative (USTR) said these economies had taken some steps or made commitments to curb forced labour but still required stronger enforcement. The 10% rate is lower than the 12.5% tariff initially proposed for India in June, reflecting changes New Delhi made to its foreign trade policy during the investigation.
US Introduces New Forced Labour Tariffs
The tariffs are part of a broader US effort to strengthen enforcement against goods linked to forced labour.
According to the USTR:
- The duties are imposed under Section 301 of the Trade Act of 1974.
- They replace the temporary 10% global tariff that expired on July 24.
- The action covers about 99.4% of US imports, with exemptions for selected products such as oil, gas, fertilizers, and certain food items.
- Countries are being assessed based on how effectively they prohibit imports made using forced labour.
Tariff Overview
| Item | Details |
|---|---|
| Measure | Additional tariff on imports |
| Legal Basis | Section 301 of the US Trade Act of 1974 |
| Tariff on India | 10% |
| Initial Proposal for India | 12.5% |
| Effective Date | July 24, 2026 |
| Objective | Encourage stronger enforcement against forced labour imports |
Countries Subject to the 10% Tariff
The 10% tariff applies to imports from 17 economies, including:
- India
- Pakistan
- Bangladesh
- United Kingdom
- Canada
- Mexico
- Malaysia
- Indonesia
- Sri Lanka
- Argentina
- Cambodia
- Ecuador
- El Salvador
- Guatemala
- Honduras
- Jordan
- Trinidad and Tobago
Other economies covered by the broader Section 301 investigation face a higher tariff rate of 12.5%, reflecting Washington’s assessment of their progress in enforcing forced labour restrictions.
Why India Received a Lower Tariff
When the USTR released its preliminary findings in June, India was among the countries proposed for a 12.5% tariff.
However, during the investigation:
- India amended its foreign trade policy.
- The government strengthened restrictions on imports produced using forced labour.
- These measures helped India qualify for the lower 10% tariff instead of the initially proposed higher rate.
Impact on Indian Exports
The new tariff is expected to increase the cost of affected Indian goods entering the US market, potentially impacting exporters in sectors that rely heavily on American demand.
Possible implications include:
- Higher landed costs for US importers.
- Increased pricing pressure on Indian exporters.
- Greater focus on supply-chain due diligence and labour compliance.
- Additional scrutiny of sourcing practices across export industries.
However, India avoided the steeper 12.5% duty that had been under consideration, which could help preserve some competitiveness relative to countries facing the higher rate.
Global Reaction
The tariffs affect around 60 trading partners in total, with rates of either 10% or 12.5% depending on each country’s progress in enforcing bans on goods made with forced labour.
Several governments have questioned the legal and policy basis for the measures, while the US maintains that the tariffs are intended to combat human rights abuses and address unfair trade practices linked to forced labour in global supply chains.
Looking Ahead
The latest US tariffs represent a significant escalation in Washington’s use of trade policy to address labour standards in global supply chains. By imposing additional duties under Section 301, the Trump administration has shifted from temporary emergency tariffs to a framework it argues has stronger legal footing. For India, securing a 10% tariff instead of the originally proposed 12.5% suggests that recent policy changes were acknowledged by US authorities, although Indian exports will still face higher costs in one of their largest overseas markets.
Looking ahead, the focus will likely shift to ongoing trade negotiations and compliance efforts. Exporting countries may introduce stricter import controls and supply-chain verification measures to reduce future tariff exposure, while businesses trading with the US are expected to strengthen documentation and sourcing practices to demonstrate compliance with forced labour regulations.
Get the day’s top stories in your inbox
One concise email. No spam, unsubscribe anytime.
