US plans extra 12.5% tariffs on India, 59 other countries for not enforcing forced labour ban

THE US on Tuesday proposed new tariffs of at least 10% on imports from most major trading partners, including India, following a US investigation into alleged forced-labour practices. India is likely to face a 12.5% tariff.

“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,” top trade official Jamieson Greer said.

“We will no longer tolerate this disparity. Some trading partners have taken initial steps to prevent the importation of forced labour goods, including through USMCA and commitments in Agreements on Reciprocal Trade. However, each of our trading partners must do more to ensure that trade does not perversely encourage and entrench forced labour globally,” he added.

India faces 12.5% tariff — How does it compare with other countries?

On Tuesday, the Office of the United States Trade Representative (USTR) said that 54 of the economies "failed to impose and effectively enforce a forced labor import prohibition." And, these countries are likely to face 12.5% tariff.

This group includes China, Vietnam, India, Taiwan and the United Kingdom.

The trade agency said six other economies -- Canada, Ecuador, the EU, Indonesia, Mexico and Pakistan -- were deemed not to have effectively enforced such prohibitions. These will be slapped with 10% tariff.

Accordingly, the 10% rate would apply to imports from Canada, Mexico, the European Union, Taiwan and Pakistan, among other places, according to a statement from the USTR. Products from other major economies, including China, India, Japan, South Korea, Brazil and Switzerland, would be subject to a higher 12.5% levy.

What are the exemptions?

But the proposed tariffs come with various exemptions, including for beef, coffee, and certain fruits and nuts.

Goods from Canada and Mexico that comply with a North American free trade pact will also be exempt -- as will certain textiles and apparel.

After the Supreme Court struck down a swath of US President Donald Trump's tariffs in February, US officials launched the new trade probes as steps toward imposing more lasting duties. It will test the tolerance of economic partners, who have largely refrained from retaliating, opting instead to negotiate deals with the US to lower import taxes and ensure market access.

The trade agency invited written comments on the ‌proposed tariffs until 6 July, and a Section 301 panel is expected to convene public hearings beginning on 7 July, according to the notice.

Apart from investigations into forced labour, the US trade envoy also started probes into excess industrial capacity.