📅 June 3, 2026 | Source: PIB and USTR / Office of the US Trade Representative
━━━━━━━━━━━━━━━━━━━━━━
WHAT HAPPENED
The United States Trade Representative (USTR) has proposed a 12.5% additional tariff on imports from India and 59 other economies under Section 301 of the US Trade Act of 1974, citing India's failure to ban goods made with forced labour.
The investigation was launched on March 12, 2026. The USTR concluded its findings on June 3, 2026, declaring that the trade practices of all 60 investigated economies are "unreasonable and burden or restrict US commerce."
India has been placed in the strictest penalty tier — 12.5% — because it does not have an existing ban, a partial framework, or any reciprocal trade commitment on forced labour imports.
━━━━━━━━━━━━━━━━━━━━━━
KEY FACTS FOR INDIAN EXPORTERS
✅ Proposed additional tariff on India: 12.5%
✅ Legal basis: Section 301, US Trade Act 1974
✅ India's tier: Highest (no existing forced labour ban)
✅ Lower tier (10%): EU, UK, Canada, Mexico — countries with partial commitments
✅ Written comments deadline: July 6, 2026
✅ Public hearing date: July 7, 2026
✅ Request to testify deadline: June 22, 2026
✅ Tariffs NOT yet in force — this is a proposal; final decision pending
━━━━━━━━━━━━━━━━━━━━━━
WHICH INDIAN EXPORT SECTORS ARE FLAGGED?
The USTR's Appendix C specifically flags India across these supply chains:
CommodityRiskCotton & TextilesFlaggedAluminium productsFlaggedRiceFlaggedFish & seafoodFlaggedCoffeeFlaggedCocoaFlaggedPalm oilFlaggedNickelFlagged
This means garment exporters, rice exporters, seafood exporters, and aluminium product manufacturers face the highest scrutiny if these tariffs proceed.
━━━━━━━━━━━━━━━━━━━━━━
TWO-TIER TARIFF STRUCTURE: WHERE INDIA STANDS
TierRateWhoTier 1 (Higher)12.5%India, China, Japan, Brazil, Saudi Arabia — no forced labour banTier 2 (Lower)10%EU, UK, Canada, Mexico — partial commitmentsTextile MechanismSpecial quotaCertain apparel & textile volumes
India falls in Tier 1 alongside China and Brazil. This is the same bracket as countries that Washington considers the most non-compliant.
━━━━━━━━━━━━━━━━━━━━━━
WHAT IS SECTION 301? (Plain Language)
Section 301 of the US Trade Act of 1974 gives the USTR authority to investigate and impose tariffs on countries whose trade practices are deemed unfair, unreasonable, or a burden on US commerce.
This is the same legal tool used in the US-China trade war. The USTR is now using it beyond China — extending it to 60 countries simultaneously, using forced labour as the justification.
Key point for exporters: Section 301 tariffs are in addition to existing tariffs. If you already face 26% reciprocal tariffs on your goods, a 12.5% Section 301 duty would stack on top.
━━━━━━━━━━━━━━━━━━━━━━
INDIA-US TRADE DEAL CONTEXT
This announcement comes at a sensitive moment. A US negotiating delegation led by chief negotiator Brendan Lynch is currently in New Delhi (June 1–4, 2026) for bilateral trade agreement talks.
India is reportedly seeking to address the USTR action within the ongoing trade deal framework rather than as a separate dispute. New Delhi denies that India's supply chains systematically use forced labour.
The USTR's own investigation also flagged a separate Section 301 probe on excess industrial capacity against 16 countries including India, China, Japan, and the EU — findings from that probe are expected shortly.
Bottom line: India is caught in at least two simultaneous Section 301 investigations as trade negotiations continue.
━━━━━━━━━━━━━━━━━━━━━━
WHAT SHOULD INDIAN EXPORTERS DO NOW?
1. Check if your product falls in a flagged category
Review the USTR Appendix C list. Cotton, aluminium, rice, seafood, coffee, cocoa, palm oil, and nickel downstream products are named.
2. File written comments before July 6, 2026
The USTR has invited public comments. Indian exporters, industry bodies (EEPC, APEDA, FIEO, TEXPROCIL, etc.) and customs brokers can submit written comments through the USTR portal. This is your window to put India's case on record.
3. Request to testify by June 22, 2026
If your export council or association wants to present oral testimony at the July 7 hearing, you must submit a request and summary of testimony by June 22.
4. Do NOT panic — these are proposals, not final tariffs
Section 301 investigations can result in duties, quotas, or no action at all. The USTR must complete its hearing process before any measures take effect.
5. Watch the India-US trade deal closely
If India agrees to adopt forced labour import prohibitions as part of the bilateral trade deal, it could move to the lower 10% tier — or potentially avoid tariffs altogether.
━━━━━━━━━━━━━━━━━━━━━━
IMPORTANT DATES — MARK YOUR CALENDAR
