Why Did the US Impose a 10% Tariff on India Instead of 12.5%?
The US has imposed a 10% Section 301 tariff on India over forced labour concerns. Here's why India avoided the higher 12.5% tariff and what the new US action means.
The United States has imposed a 10% tariff on India under Section 301 of the Trade Act of 1974 as part of a broader crackdown on imports linked to forced labour. While India was initially expected to face a higher 12.5% tariff, officials said it secured the lower rate following constructive discussions with the United States on labour practices.
The decision was announced by the Office of the US Trade Representative (USTR), which unveiled new tariff rates of 10% and 12.5% on 60 economies at the direction of US President Donald Trump. The tariffs will take effect from Friday.
Why Did India Avoid the 12.5% Tariff?
According to officials quoted by ANI, India was originally placed in the 12.5% tariff category during the review process. However, sustained engagement with the US over labour practices helped New Delhi move to the lower 10% slab. How Will Donald Trump’s New Generic Drug Tariff Plan Impact India’s Pharma Industry?
India is among 17 economies that qualified for the 10% tariff rate. Other countries in this category include the United Kingdom, Canada, Bangladesh, Indonesia, Mexico, Pakistan, Malaysia, Sri Lanka and Cambodia.
What Is the US Section 301 Action?
The USTR said the tariffs are part of a Section 301 investigation into whether trading partners have failed to prohibit the import of goods produced using forced labour. US Targets Canadian Wine, Cement and More With 50% Tariffs; Here's Why.
Under the Trade Act of 1974, Section 301 allows the US Trade Representative to impose tariffs or other trade measures against countries found to be engaging in unfair trade practices.
The USTR said a 10% tariff applies to economies that have implemented or committed to enforcing bans on forced labour imports through domestic laws or reciprocal trade agreements. All other investigated economies will generally face a 12.5% tariff, while certain products from the European Union, Japan, South Korea, Taiwan and Switzerland will attract rates of either 10% or 12.5%, depending on the product category.
What Did the USTR Say?
US Trade Representative Ambassador Jamieson Greer said President Trump directed the action because many countries have failed to take adequate steps to eliminate forced labour from global supply chains.
"President Trump recognises that decades of moral suasion have not eradicated forced labour from global supply chains. The United States has had a forced labour import ban for nearly a century, and rigorously enforces it. It's well past time for our trading partners to do the same," Greer said.
He also welcomed countries that had moved quickly to adopt forced labour import prohibitions and expressed hope that those measures would be effectively enforced.
How Did the Investigation Begin?
The USTR launched investigations into 60 economies in March this year under Section 301(b) of the Trade Act of 1974. The review included consultations with more than 45 governments, public hearings and an assessment of over 1,600 written submissions before the final tariff decision was announced.
The latest action marks another step in President Trump's renewed trade agenda, which has increasingly relied on Section 301 after legal challenges limited the use of emergency powers to impose tariffs.
(The above story first appeared on LatestLY on Jul 24, 2026 07:25 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).