America’s new tariff on India-China; Preparation to impose additional duty of up to 12.5% ​​under charges of forced labor

America has proposed to impose additional tariff of up to 12.5 percent on imports from 60 economies of the world including India and China. This step has been proposed against countries that the US has accused of failing to stop or take effective action against the import of products involving forced labor. However, this proposal is still in the review stage and a final decision has not been taken. Also, it is being portrayed as a reactionary tariff or pressure.

This proposal has been introduced by the Office of the US Trade Representative (USTR). It has been brought under Section 301 of the American Trade Act, 1974. The same law was used to impose large-scale tariffs on goods imported from China during the first term of US President Donald Trump.

Section 301 gives the US the authority to take action against countries whose trade policies it deems harmful or unfair to US trade interests. If this proposal is implemented, it could have a huge impact on global trade and create new uncertainty in international markets.

Let it be known that talks are going on between India and America regarding trade agreement. The talks between the officials of the two countries started from June 2 and are scheduled to continue till June 4. Meanwhile, USTR has proposed imposing additional tariffs on imports from 60 economies, including India, China, Japan, South Korea, the United Kingdom and several countries in Southeast Asia.

According to the proposal, countries that have implemented a full or partial ban on the import of products involving forced labor could face an additional 10 percent tariff. Whereas for those countries which have not implemented any such restriction, it has been suggested to impose tariff up to 12.5 percent.

USTR’s investigation found India and China among 54 economies that reportedly neither imposed effective legal restrictions on imports of products involving forced labor nor effectively enforced existing regulations.

With regard to India, USTR said the country has “failed to establish and effectively enforce restrictions on imports involving forced labor.” The report also claimed that India’s policies and practices affect US trade.

The US side argues that goods produced through forced labor enter the global supply chain at a lower cost, creating unequal competition for businesses and workers in countries that adhere to strict labor standards.

Apart from India and China, European Union, Japan, South Korea, United Kingdom, Vietnam, Bangladesh, Thailand, Canada, Mexico and many Gulf countries are also included in this list. According to USTR, legal sanctions exist in six regions, namely Canada, Mexico, Pakistan, Indonesia, Ecuador and the European Union, but they are not effectively enforced.

USTR has clarified that this is only a proposal and that an extensive review and consultation process will be completed before it is implemented. This process makes it clear that Section 301 is being used to put pressure on India in trade agreement negotiations.

Experts believe the move shows that issues related to labor standards, supply chain transparency and forced labor are now becoming an important part of US trade policy. If the proposed tariffs are implemented, it could have a direct impact on many exporting countries in Asia, including India and China.

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