More US tariffs coming? Why Trump may slap fresh 12.5% levies on India

India is facing a new 12.5 per cent tariff from the United States.

The new tariff has been proposed by the US Trade Representative (USTR), which has been conducting an investigation into dozens of its trading partners. Under the proposed scheme, India would be hit with a 12.5 per cent levy, while other countries would face a 10 per cent tariff.

Washington began the investigation after the US Supreme Court struck down Donald Trump’s ‘Liberation Day’ tariffs. Trump then introduced a new 10 per cent global tariff structure that effectively replaced the emergency tariffs invalidated by the Supreme Court.

The development comes as Indian negotiators are holding talks with US counterparts in New Delhi to finalise a bilateral trade agreement (BTA).

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But what do we know about the new tariff? What grounds have they shown to justify the new move?

What has the US proposed?

As per India Today, the US has proposed tariffs of at least 10 per cent on imports from most major trading partners. It has suggested a higher 12.5 per cent rate for countries it believes have not taken adequate steps to curb forced labour in supply chains including India.

Around 60 economies were reviewed under the USTR investigation. Of these, 54, including India, China and the United Kingdom, were found to have both failed to impose and effectively enforce prohibitions on imports linked to forced labour. These countries would face the higher 12.5 per cent tariff. Meanwhile, a smaller group including Pakistan would face a lower 10 per cent rate due to partial compliance.

A container ship operates in the Arabian Sea off Mumbai, India, May 6, 2026. File Image/Reuters

However, it is important to note that the proposal is not yet final. The USTR has invited public comments until July 6 and will hold hearings starting July 7 before taking a final decision, as per Mint. If implemented, the tariffs could come into effect as soon as later this year.

Why is the US doing this?

The US claims it is concerned about forced labour in global supply chains. Under Section 301 of the US Trade Act of 1974, Washington can act against policies it considers “unreasonable” or a burden on US commerce.

The USTR has claimed that failures to address forced labour allow cheaper goods to enter global markets, creating an unfair cost advantage. US Trade Representative Jamieson Greer said this forces American workers to compete on an “uneven playing field”.

The USTR report said such failures distort global trade conditions and disadvantage countries with stricter labour enforcement.

What is ‘forced labour import prohibition’?

At the centre of the dispute is the idea of a forced labour import prohibition—laws that prevent goods produced wholly or partly using forced labour from entering a country’s market.

The US already enforces such restrictions domestically and expects trading partners to implement similar bans. According to the USTR findings quoted by Mint, India has “failed to impose and effectively enforce a forced labour import prohibition”, making its policies a burden on US commerce.

Is this a continuation of earlier tariffs?

As mentioned before, the move comes after the US Supreme Court struck down earlier tariffs imposed under Donald Trump’s “Liberation Day” policy.

The US then imposed a temporary 10 per cent tariff. The new proposal seeks to reintroduce tariffs under Section 301. If implemented, the current 10 per cent regime would likely be replaced by the 12.5 per cent tariff in the case of countries like India.

The USTR ha claimed that failures to address forced labour allow cheaper goods to enter global markets, creating an unfair cost advantage. File/AFP

Section 301 actions can also include additional measures such as quotas or other trade restrictions, depending on the final outcome, as per India Today.

How does India compare with other countries?

As per Mint, India has been placed in the higher tariff category alongside major economies such as China, Japan, South Korea, Brazil and Switzerland.

Countries that have adopted legal prohibitions but struggle with enforcement—such as Canada, Mexico and blocs like the European Union—would face a lower 10 per cent tariff, as per India Today.

While the tariffs are expected to apply broadly, some exemptions may be made. As per Mint, some agricultural goods such as beef, coffee, fruits and nuts may be excluded. Goods covered under regional trade agreements may also be exempt.

A separate mechanism for textiles and apparel is also being considered, which could allow limited volumes of certain products to enter at lower tariff rates, as per Hindustan Times.

What does this mean for India–US trade talks?

The proposal comes as India and the United States are negotiating a bilateral trade agreement, with talks currently underway in New Delhi. The US could attempt to use these proposed tariffs as leverage over India.

US chief negotiator Brendan Lynch. (Photo: @usembassycolomb/X)

However, this could also complicate the ongoing negotiations. Despite this, the US remains India’s largest trading partner, with bilateral trade exceeding $120 billion in recent years.

FAQs

1. Is the 12.5 per cent tariff already in effect?

No. It is currently a proposal under review and will only take effect after consultations and hearings are completed.

2. Why is India facing a higher tariff than some countries?

Because the USTR has claimed that India has neither implemented nor effectively enforced a prohibition on imports linked to forced labour.

3. Will this replace the current 10 per cent tariff regime?

The new tariff will replace the temporary 10 per cent regime introduced after earlier tariffs were struck down if it is implemented.

With inputs from agencies