Explained: How India secured a lower US tariff rate under section 301

The US has imposed new Section 301 tariffs on several countries, placing India in the lower 10% category after labour-related discussions, instead of the initially proposed 12.5% rate.

Image used for representational purposes only. (Photo | ANI)

The United States has announced new tariffs of 10 per cent and 12.5 per cent on imports from several countries under Section 301 of its trade law. India has been placed in the lower 10 per cent tariff category. According to officials, India was initially expected to face a 12.5 per cent tariff, but after discussions with the US on labour standards, it secured the lower 10 per cent rate.

The move follows an announcement by the Office of the US Trade Representative (USTR) on Thursday, which imposed new tariffs of 10 per cent to 12.5 per cent on imports from 60 economies. The action, directed by US President Donald Trump, targets countries that the US says have not done enough to stop the import of goods made using forced labour.

According to the USTR, India is one of 17 economies that will face the lower 10 per cent tariff. Other countries in this category include the United Kingdom, Canada, Indonesia, Mexico and Bangladesh.

The ANI quoting officials said that India had originally been considered for a 12.5 per cent tariff but was placed in the 10 per cent category following constructive engagement with the United States on labour practices.

Ranging from 10% to 12.5%, the new duties hit major trading partners including India, the UK, EU, Canada and Japan and take effect Friday.

The announcement was made by the Office of the US Trade Representative on Thursday, in what it called was Ambassador Jamieson Greer's taking final action, at President Trump's direction to impose tariffs on 60 economies for their "failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor".

Section 301 of the Trade Act of 1974 grants the US Trade Representative the authority to enforce tariffs or other punitive actions against nations found to be using unfair trade practices.

The major development comes after the USTR in March this year initiated investigations of 60 economies under Section 301(b) of the Trade Act of 1974 to determine whether the practices of these economies related to the failure of enforcing a ban on the importation of goods produced with "forced labour".

This was followed with consultations with more than 45 governments along with several public hearings into the investigation.

(With inputs from ANI)