The United States’ proposed 12.5 percent tariff on imports from India and 53 other countries is not yet law. Public hearings are scheduled for July and affected countries still have an opportunity to challenge the findings. But the message from Washington is unmistakable—tariffs remain the preferred instrument of US trade policy even when previous tariff frameworks have run into legal trouble.
The latest action stems from a Section 301 investigation in which the US Trade Representative concluded that India and dozens of other countries have failed to prohibit imports of goods allegedly produced with forced labour. The charge is striking not for what it says but for what it does not say. The US is not accusing India of producing exports for the American market using forced labour. Instead, it argues that India’s own import practices create distortions that ultimately disadvantage American workers. That is an expansive interpretation of Section 301, a law designed to address unfair foreign practices that directly harm American commerce. Historically, it has been used against issues like intellectual property violations and market-access barriers. Extending it to scrutinise what sovereign countries import from third countries pushes the boundaries of arbitrary trade enforcement.
The timing is significant. The proposal arrives as Washington and New Delhi seek an interim trade deal while negotiating a broader bilateral trade agreement. It also follows judicial setbacks to earlier tariff measures. In that context, the forced-labour investigation appears to provide a stronger legal basis for new tariffs while increasing negotiating leverage over trading partners. Supply-chain transparency and ethical sourcing are certainly legitimate global objectives. However, credibility matters. Exemptions for strategically important products such as rare earths, certain metals and other critical inputs show that labour standards are being applied selectively by Washington.
India should respond with calm resolve. It must engage in the proceedings, challenge the legal and factual basis of the proposed tariffs and defend its interests. Similarly, New Delhi should continue trade negotiations with Washington, recognising the strategic value of a stronger economic partnership. However, the two processes should remain separate. Trade agreements should be driven by mutual economic benefit and not negotiated under threat of punitive tariffs. If the proposed 12.5-percent duty is intended as leverage, India should resist. Durable partnerships are built on reciprocity, trust and respect, not coercion.