THE ASIAN INDEPENDENT UK
Bal Ram Sampla
Geopolitics
The US government is threatening to put a new 12.5% tax (tariff) on items that India sells to America.
This has caused a lot of surprise because the US isn’t accusing India of using forced labour inside its own borders. Instead, Washington is upset that India buys materials from other countries (like China) that use forced labour, and then uses those materials to make goods that end up in the US.
The US has very strict laws banning any imports made with forced labour. They are now tracking global supply chains more closely than ever.
The US Trade Representative (USTR) recently looked at 60 countries around the world. They divided them into two groups based on how they handle forced labour imports:
(1) The 12.5% Tariff Group (54 countries, including India): The US says these countries do not have a clear law that bans importing goods made with forced labour.
(2) The 10% Tariff Group (6 countries, including the EU and Canada): These countries have a ban on the books, but the US feels they do not enforce it strictly enough.
Because India does not block these tainted materials from entering its own factories, the US argues that India is acting as a “backdoor” that lets forced-labour goods slip into the global market.
Which Goods Could Get Hit?
If these tariffs go into effect, it will make Indian products more expensive for American buyers. The main industries at risk include:
(I) Clothing and Textiles: Many Indian clothing factories import cotton, yarn, or fabric from China. The US claims some of this fabric comes from regions using forced labour.
(II) Engineering and Metals: Steel and aluminium products.
(III) Technology and Cars: Electronics, car parts, and automobiles.
(IV)Agriculture: Certain farmed goods.
Why is This Happening Right Now?
The timing of this threat is a classic pressure tactic. The US dropped this massive report right in the middle of important trade talks happening in New Delhi.
US and Indian officials have been working hard to sign a new, major trade deal. By threatening a 12.5% tax right now, Washington gets extra leverage to push India into agreeing to strict new rules on how it tracks and buys raw materials.
What Happens Next?
The extra taxes are not starting immediately. The US government is letting the public give feedback on the plan until July 6, 2026, and will hold official hearings the next day.
Meanwhile, India’s trade experts are arguing that the US is overstepping its bounds. They believe one country shouldn’t be allowed to use tax threats to force another independent country to change its internal import laws. Trade talks between the two nations are continuing, but the mood just got a lot more tense.
References
1.https://ustr.gov/about/policy-offices/press-office/press-releases/2026/june/ustr-section-301-determination-brazils-unreasonable-acts-policies-and-practices?hl=en-GB
2.https://indianexpress.com/article/world/us-news/us-trump-tariffs-india-forced-labor-imports-ustr-forced-labour-10721276/?hl=en-GB
