India formally objects to U.S. Section 301 probe that could impose 12.5% duties

India has formally asked the United States to reconsider a Section 301 tariff proposal that could add 12.5% duties on Indian goods, opening a new dispute in Washington’s widening use of trade penalties. The proposal is part of a U.S. Trade Representative effort covering 60 economies over what it says is a failure to impose and enforce bans on goods made with forced labor. India’s filing came just before a July 6 deadline for written comments, according to the USTR docket and Indian media reports. The dispute is unfolding as Democratic state attorneys general in the United States press a separate legal and political challenge to the administration’s broader tariff strategy. ### Why is India in this Section 301 case at all? The U.S. Trade Representative opened 60 Section 301 investigations on March 12, saying it would examine whether trading partners had failed to impose and effectively enforce bans on imports made with forced labor. USTR said those practices could be “unreasonable or discriminatory” and could burden U.S. commerce. On June 2, USTR said it had made affirmative findings in those investigations and proposed additional duties on products from the economies under review. The agency said economies with a forced-labor import prohibition, or a commitment to impose one, would face a proposed 10% duty, while “all other economies” would face 12.5%. (ustr.gov) ### What is India objecting to? India’s objection targets both the legal basis and the factual basis for the proposed tariff action, according to reports on its submission. Indian officials argued the U.S. investigation used an overly broad approach and lacked adequate evidence for claims that India had failed to act against forced-labor-linked imports. (ustr.gov) The USTR framework matters because the proposed 12.5% rate applies to economies that, in the agency’s view, do not have a qualifying prohibition or enforcement regime. USTR’s June 2 notice did not single India out in the press release, but the broader investigation covers 60 economies and proposes tariff rates by category. (msn.com) ### How far along is the U.S. process? USTR set July 6, 2026, as the deadline for written comments on the proposed action and scheduled public hearings for July 7-9. The agency’s Section 301 page says requests to appear were due June 22. Ambassador Jamieson Greer said on June 2 that the failure of major trading partners to address imports made with forced labor was “unacceptable” and said the United States would “no longer tolerate this disparity.” USTR said the proposal would apply to all products of the investigated economies, subject to listed exceptions and a textile mechanism for some apparel and textile imports. (ustr.gov 1) (ustr.gov 2) ### What pushback is the administration getting at home? A coalition of 22 Democratic state attorneys general submitted a comment letter this week opposing the forced-labor tariff proposal. The letter said the states opposed forced labor but argued the proposal used that issue “as a pretext” for an illegal tariff scheme that was too broad to match its stated aim. (ustr.gov) Arizona Attorney General Kris Mayes and Oregon Attorney General Dan Rayfield were among the officials publicizing the filing. Their offices said the administration should drop the plan and pointed to earlier court wins against other Trump tariff actions, including a May ruling by the Court of International Trade that invalidated a separate set of tariffs and an ensuing appeal by the administration. (doj.state.or.us) ### What happens next for India and the United States? The July 7-9 hearings are the next formal step in the USTR process. After that, the agency can decide whether to finalize, revise or withdraw the proposed duties following the comment record and hearing testimony. (azag.gov) Any final action would leave India facing both a trade negotiation problem and a potential tariff increase on goods entering the U.S. market. On the U.S. side, the next milestones are the hearing record, any post-hearing rebuttal submissions allowed by USTR, and a final determination by Ambassador Greer’s office. (ustr.gov)