The United States Trade Representative (USTR) has proposed imposing a 12.5% tariff on imports from India and 53 other countries, citing their failure to enforce prohibitions on goods made with forced labour. The move, made under Section 301 of US trade law, targets key Indian export sectors including steel, aluminium, automobiles, electronics, and agriculture. USTR claims these practices burden American commerce, though India has dismissed the allegations as unjustified and inconsistent with global rules.

The announcement coincides with ongoing negotiations between US and Indian officials on a framework agreement first announced in February 2026. India has maintained it will only accept a bilaterally negotiated tariff rate if it gains a comparative advantage over rival exporters. Meanwhile, the USTR also cited trans-shipment practices and supply chain risks, particularly pointing to forced labour in Chinese cotton and polysilicon used by other nations.

The USTR is now accepting public comments until July 6, 2026, and will hold hearings on July 7 before finalizing its decision. Six countries, including the EU and Canada, face a lower 10% proposed tariff. The outcome could significantly impact global supply chains and bilateral trade relations, especially as India seeks to expand its export footprint amid rising geopolitical trade pressures.