The United States on Thursday introduced new tariffs of 10% and 12.5% on imports from several countries under Section 301. India has been placed in the lower 10% tariff slab, instead of the higher 12.5% that was being considered earlier.
The Office of the US Trade Representative (USTR) announced new tariffs on imports from 60 trade partners. The order by US President Donald Trump, was based on concerns that these economies had not done enough to stop the import of products made using forced labour. India is one of 17 economies that received the lower 10% tariff rate, along with countries such as the UK, Canada, Indonesia, Bangladesh and Mexico.
“The United States is the only country in the world to adopt, and effectively enforce, a ban on imports made with forced labour”, the USTR stated. It further added that Trump is asking US trading partners to join Washington in its effort to remove forced labour from global supply chains.
Why was India placed in the lower 10% slab?
Although India was first expected to face the higher 12.5% tariff, it was later moved to the 10% category following positive talks with the United States on labour-related issues.
US Trade Representative Ambassador Jamieson Greer said years of international appeals had done little to eliminate forced labour from global supply chains. He urged US trading partners to adopt stronger measures, noting that the United States has long prohibited the import of goods produced through forced labour.
Countries under 10%tariff slab
The USTR said India is among 17 economies that will face the lower 10% tariffs. The other countries in this category are Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom.
According to the USTR, imports from the European Union, Taiwan, Japan, South Korea and Switzerland will be subject to tariffs of either 10% or 12.5% in addition to the duties already in place. Countries not included in the lower tariff category will be charged the full 12.5 per cent rate. The revised tariffs will come into force on Friday.
The investigations began in March under Section 301 of the Trade Act of 1974, covering 60 economies. As part of the process, the USTR held discussions with representatives from more than 45 governments and conducted public hearings. It also examined over 1,600 written submissions before finalising the tariff rates.
Products that are already covered by separate sector-specific tariffs, such as steel and aluminium, will not be affected by the newly announced measures. A US official also said that certain energy products, fertilisers and goods traded under the US-Mexico-Canada Agreement (USMCA) will remain exempt from the additional tariffs, according to AFP.
The latest action comes after the US Supreme Court ruled earlier this year that several tariffs introduced under emergency powers were not legally valid. Following that decision, the administration turned to other legal provisions to continue implementing its trade policy.
India’s precautionary move
After the threat of 12.5% tariffs by US earlier, India had introduced detailed guidelines aimed at identifying goods produced using forced labour in an effort to comply with international labour standards and avoid being placed in the higher 12.5% tariff category.
Under a Trade Notice, the Directorate General of Foreign Trade (DGFT) amended the Handbook of Procedures under the Foreign Trade Policy (FTP), giving it the authority to investigate imports either on its own or after receiving a complaint. These investigations were intended to determine whether imported goods have been manufactured wholly or partly using forced labour.
Trade experts had then said tjat the move reflects India’s efforts to strengthen its domestic rules on forced labour and align them more closely with global standards. They had added that the changes could improve India’s position in future trade negotiations and discussions on market access.