The US trade representative (USTR) has proposed imposing additional duties of up to 12.5% on imports from India and dozens of other economies after concluding that they have failed to adequately prohibit or enforce restrictions on goods produced using forced labour.
The move comes even as India and US continue negotiations on the first tranche of a proposed bilateral trade agreement (BTA), with officials from both countries currently engaged in discussions aimed at finalising the pact.
In a
statement issued on 2 June 2026, the USTR said it had completed 60 investigations under Section 301 of the US Trade Act of 1974 and determined that the acts, policies and practices of the economies under scrutiny are 'unreasonable' and burdened or restricted US commerce.
"The failure of our most important trading partners to address the importation of goods made with forced labour is unacceptable. This creates a dynamic where American workers are forced to compete globally on an unlevel playing field," US trade representative ambassador Jamieson Greer said.
"We will no longer tolerate this disparity," he added.
According to the USTR, India is among 54 economies that have 'failed to impose and effectively enforce a prohibition on the importation of goods produced with forced labour'.
The list also includes major US trading partners such as China, Japan, Australia, Brazil, the United Kingdom, Saudi Arabia, South Korea, Thailand, Vietnam, Singapore and the United Arab Emirates (UAE).
A separate group comprising Canada, Ecuador, the European Union (EU), Indonesia, Mexico and Pakistan was found to have existing prohibitions on forced labour imports but inadequate enforcement mechanisms.
Based on its findings, the USTR has proposed additional duties on all products imported from the investigated economies, subject to certain exclusions outlined in a federal register notice.
For economies that impose a forced labour import prohibition, that have committed to impose and enforce such a prohibition through an Agreement on Reciprocal Trade, or economies that have imposed a partial regime with the effect of preventing the importation of certain forced labour goods, the USTR proposes 10% as the rate of additional duties. For all other economies, including India, 12.5% is the proposed rate of additional duty.
The USTR has also proposed a separate textile mechanism that would allow a specified volume of apparel and textile imports from selected economies to enter the United States at reduced Section 301 tariff rates.
India Disputes Allegations
According to media reports, India has rejected allegations under the forced labour clause and urged the United States to discontinue the investigations.
Indian officials have reportedly argued that such issues should be addressed within the framework of ongoing bilateral trade negotiations rather than through unilateral trade actions.
The development adds another layer of complexity to trade discussions between the two countries.
Earlier this week, commerce and industry minister Piyush Goyal said that most elements of the proposed bilateral trade agreement had already been finalised.
"Mostly everything is finalised," Mr Goyal said, adding that discussions are now focused on a limited number of outstanding legal and technical issues arising from changes in the US trade policy framework.
The minister expressed confidence that the first tranche of the BTA would be concluded and signed soon, paving the way for negotiations on a broader and more comprehensive trade pact.
Public Consultation Process Begins
The proposed tariffs are not yet final.
The USTR has invited stakeholders to submit requests to participate in public hearings by 22 June 2026, along with summaries of their testimony.
Written comments on the proposed actions can be submitted until 6th July, while public hearings are scheduled for 7 July 2026.
The final decision on whether to implement the proposed tariffs will be taken after the consultation process is completed.
The proposed action is being closely watched by exporters and policymakers in India, particularly because Washington is expected to rely increasingly on Section 301 investigations as part of its future trade enforcement strategy once certain temporary tariff arrangements expire.
Trade experts note that India's primary concern remains ensuring that its exports retain a competitive tariff position relative to rival exporting nations in key sectors such as manufacturing, textiles, engineering goods and consumer products.
What is Section 301?
Section 301 of the US Trade Act of 1974 empowers the USTR to investigate foreign government policies or practices that it considers unjustifiable, unreasonable or discriminatory and that burden or restrict US commerce.
Following an investigation, the provision allows Washington to impose retaliatory measures, including additional tariffs and trade restrictions.
The latest investigations were self-initiated by the USTR on 12 March 2026. According to the agency, it received testimony from nearly 60 witnesses and reviewed about 500 comments and rebuttal submissions before reaching its conclusions.
The USTR argued that the absence of effective forced labour import prohibitions globally undermines efforts to eliminate forced labour, distorts market competition, harms businesses that comply with labour standards and facilitates circumvention of existing import restrictions.
