The United States Trade Representative (USTR), under Section 301 of the Trade Act of 1974, has proposed to impose an additional up to 12.5 per cent tariff on India and 59 other economies over allegations of using forced labour to produce imported goods.
The investigations were launched in March 2026 under Section 301 of the Trade Act of 1974, a law that allows the United States to respond to foreign trade practices considered harmful to US commerce. The review covered economies responsible for nearly all US imports. 
In a statement, USTR claimed that 60 economies have failed to enforce rules against imported goods made via forced labour, saying the acts, policies, and practices of these economies are "unreasonable and burden or restrict US commerce," making them actionable under American trade law.
US Trade Representative Ambassador Jamieson Greer stated that the failure of "our most important trading partners to address the importation of goods made with forced labour is unacceptable." 

Which Countries Are Affected

The USTR proposal names India, China, Japan, South Korea, Vietnam, the United Kingdom, and several others. Among the countries examined, India was listed among those that, according to the USTR, neither implemented nor effectively enforced prohibitions on imports linked to forced labour. Meanwhile, Canada, Mexico, the European Union, Indonesia, Ecuador and Pakistan were found to have legal frameworks in place but were considered by USTR to have insufficient enforcement mechanisms. 

Two-Tier Tariff Structure

Economies that have already adopted, or committed to adopt, forced labour import prohibitions could face an additional tariff of 10%, while all others could be subject to a 12.5% duty
The USTR has also suggested a separate mechanism for textiles and apparel that would permit a specified volume of imports from selected economies to enter the US market at a lower Section 301 tariff rate.

Impact on India-US Trade Talks

The development comes as senior trade officials from the US and India are engaged in a three-day round of discussions in New Delhi aimed at advancing a proposed bilateral trade agreement. The timing of the announcement is expected to add complexity to those negotiations.
The trade authority noted that weak controls on forced labour-related goods can distort market conditions by enabling certain manufacturers to operate at lower costs, a framing that the US has used to argue that such practices amount to unfair competition against American workers and businesses.

What Happens Next

The USTR will hold hearings about the proposed actions on July 7, 2026. The proposal remains open to consultation before any final tariff decision is announced, giving affected nations a window to respond or negotiate exemptions.