US proposes up to 12.5% tariff on India, China over forced labour concerns

The proposed action, announced by the Office of the United States Trade Representative (USTR), comes under Section 301 of the US Trade Act of 1974, the same law that was used to impose tariffs on Chinese imports during President Donald Trump's first term.

In Short

• US proposes tariffs up to 12.5% on imports from 60 countries including India
• Tariffs target countries failing to address forced labour in supply chains
• Proposal under review; could impact global trade and exporters in Asia

India and China are among 60 economies that could face fresh tariffs from the United States after Washington proposed duties of up to 12.5% on imports linked to countries it says have failed to adequately address forced labour concerns.

The proposed action, announced by the Office of the United States Trade Representative (USTR), comes under Section 301 of the US Trade Act of 1974, the same law that was used to impose tariffs on Chinese imports during President Donald Trump's first term.

Section 301 is a US law that lets US impose tariffs on countries it believes are hurting American trade interests through unfair practices.

The move is still under review and no final decision has been taken. However, if implemented, it could affect a wide range of imports into the United States and add another layer of uncertainty to global trade.

The development of a fresh tariff proposal comes as officials from India and the US are in talks for a trade deal. The talks began on June 2 and will carry on till June 4.

WHAT IS US PROPOSING?

The USTR has proposed additional tariffs of up to 12.5% on imports from 60 economies, including India, China, Japan, South Korea, the United Kingdom and several Southeast Asian nations.

According to the USTR, the affected economies either failed to impose restrictions on goods made using forced labour or failed to effectively enforce existing rules.

Under the proposal, countries that have adopted a full or partial prohibition on forced labour-linked imports could face a 10% tariff.

Countries that have not implemented such prohibitions could face a higher tariff of 12.5%.

US Trade Representative Jamieson Greer said the failure of major trading partners to address imports linked to forced labour had created an uneven playing field for American workers.

"The failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable," Greer said in a statement.

WHY INDIA AND CHINA HAVE BEEN FLAGGED

According to the USTR findings, India and China were among 54 economies found to have both failed to impose a legal prohibition and failed to effectively enforce restrictions on goods linked to forced labour.

In its findings on India, the USTR said the country had "failed to impose and effectively enforce a forced labor import prohibition" and concluded that India's policies and practices burden or restrict US commerce.

The USTR argues that goods produced using forced labour can enter global supply chains at lower costs, creating unfair competition for businesses and workers in countries that enforce stricter labour standards.

China was also included in the same category despite already facing US scrutiny under several existing trade and labour-related measures.

WHAT IS SECTION 301?

Section 301 of the US Trade Act of 1974 allows the US government to investigate foreign trade practices and impose retaliatory measures if it determines those practices are unfair or harmful to American commerce.

The law gained global attention during Donald Trump's first term when it became the basis for tariffs imposed on hundreds of billions of dollars worth of Chinese goods.

The latest investigations were launched on March 12, 2026 and covered economies accounting for roughly 99.4% of total US imports.

The investigations examined whether governments had failed to prohibit or effectively restrict imports of goods produced wholly or partly using forced labour.

WHICH COUNTRIES ARE ON THE LIST?

Apart from India and China, the list includes the European Union, Japan, South Korea, the United Kingdom, Vietnam, Bangladesh, Thailand, Canada, Mexico and several Gulf economies.

The USTR said six economies, including Canada, Mexico, Pakistan, Indonesia, Ecuador and the European Union, already have legal prohibitions in place but were found to be ineffective in enforcing them.

The proposal is not yet final. The USTR said the recommendations will undergo further review and consultation before any tariffs are formally implemented.

The proposal also includes a separate mechanism for textile and apparel imports, under which limited volumes of certain products could enter the United States at lower tariff rates. Details of which countries may qualify have not yet been announced.

The latest move comes as the US expands trade enforcement measures linked to labour standards, supply chain transparency and forced labour concerns.

Washington has already implemented the Uyghur Forced Labor Prevention Act, which restricts imports linked to China's Xinjiang region unless importers can prove goods were not produced using forced labour.

The proposed Section 301 tariffs indicate that labour standards are becoming an increasingly important part of US trade policy and could have implications for exporters across Asia, including India and China, if the measures eventually come into force.

- Ends