US Proposes 12.5% Tariff on India Amid Trade Negotiations
USTR proposes 12.5% extra tariff on India amid trade deal negotiations
Business Standard
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The US Trade Representative (USTR) has proposed a 12.5% tariff on India and 53 other nations due to concerns over forced labor practices. Public comments are invited until July 6, with hearings scheduled for July 7. This proposal coincides with ongoing trade deal discussions between the US and India.
- 01The USTR's investigation found India failed to enforce a prohibition on imports made with forced labor.
- 02The proposed tariff is part of a broader Section 301 investigation involving 60 economies, which account for 99.4% of US imports.
- 03India and the US are negotiating a Bilateral Trade Agreement (BTA), with an interim deal nearly finalized.
- 04The US is India's largest export market, representing nearly 20% of India's total exports.
- 05Ajay Srivastava from GTRI suggests that India may need to challenge the legal basis of the proposed tariff.
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The Office of the US Trade Representative (USTR) has proposed a 12.5% tariff on India and 53 other countries, including China and Vietnam, following an investigation that concluded these nations did not adequately address the import of goods produced with forced labor. The USTR's report indicated that India's failure to enforce a prohibition on such imports burdens US commerce. Public comments on this proposal are invited until July 6, with hearings set for July 7. This tariff proposal comes as US and Indian officials are engaged in discussions regarding a Bilateral Trade Agreement (BTA). The interim trade deal, which includes a reciprocal tariff of 18% on Indian goods, is nearly finalized, according to Indian Commerce Minister Piyush Goyal. The US is India's top export destination, accounting for approximately 20% of India's total exports, with a trade surplus of $33.83 billion reported for the fiscal year 2025-26. Experts suggest that the proposed tariffs reflect a broader strategy by Washington to exert pressure on India through Section 301 investigations.
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The proposed tariff could lead to increased costs for Indian exporters, affecting their competitiveness in the US market.
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