India urges U.S. to drop proposed 12.5% tariff tied to forced-labour claims

India has formally asked the United States to withdraw a proposed 12.5% tariff that Washington linked to alleged failures to block imports made with forced labor, opening a new point of friction in a broader U.S. trade campaign. New Delhi said the measure lacks legal basis and factual support, and told Washington it was prepared to address any specific concerns through talks rather than unilateral penalties. The dispute sits inside a wider Section 301 action by the Office of the U.S. Trade Representative, which on June 2 proposed new tariffs on imports from 60 economies over what it called failures to impose or effectively enforce bans on goods produced with forced labor. ### What exactly did India ask Washington to do? India on July 8 urged the United States to reconsider the proposed extra 12.5% tariff and said it was willing to engage directly with USTR on any concrete issue Washington wanted to raise. The Indian side argued that the proposed action was unsupported by evidence and should not proceed as a unilateral trade penalty. (government.economictimes.indiatimes.com) The proposed surcharge is not a standalone India-only action. USTR’s June 2 notice said the agency had made Section 301 findings against 60 economies, concluding that their acts, policies and practices related to the importation of forced-labor goods were “unreasonable” and burdened or restricted U.S. commerce. (government.economictimes.indiatimes.com) ### Where does the 12.5% number come from? USTR’s June 2 package set out different proposed tariff rates across the 60 economies covered by the forced-labor investigation. Trade-law summaries published after the notice said the proposed rates ranged from 10% to 12.5% on roughly $37.5 billion in imports, with India among the countries facing the higher 12.5% rate. (ustr.gov) Section 301 of the Trade Act of 1974 gives the U.S. government authority to respond to foreign practices it determines are unreasonable or discriminatory and that burden U.S. commerce. In this case, USTR tied that authority to whether trading partners have imposed and effectively enforced prohibitions on imports made with forced labor. (ustr.gov) ### How far along is the U.S. process? March 12 was the date USTR initiated the forced-labor investigations and opened a public docket for comments. April 28 and April 29 were the dates of the public hearing listed on USTR’s Section 301 page, and June 2 was the date the agency published its findings and notice of proposed actions. (ustr.gov) July 6 was the deadline for written comments identified in trade-law summaries of the case, and USTR has said it will make a final decision after considering submissions and testimony. That means India’s appeal landed while the U.S. review was still active, not after a final tariff order. (ustr.gov) ### Why are Brazil and China part of this story? At a separate USTR hearing on Brazil-related tariffs, companies and labor groups argued over whether new U.S. duties would change behavior or simply reshape supply chains. DatamarNews reported that business representatives warned tariffs on Brazilian goods could leave room for Chinese exporters to replace Brazilian shipments in the U.S. market. (crowell.com) Brazil trade data published this week pointed in the same direction. A report cited by outlets carrying the story said the U.S. share of Brazilian exports fell to 9.4% in the first half of 2026, the lowest level since 1997, while China widened its lead as Brazil’s top trading partner. (msn.com) ### What comes next in the India case? USTR’s Section 301 page says the forced-labor investigation remains in the post-comment stage, with the agency weighing the record before deciding whether to impose the proposed tariffs. India has already said it wants that next step to be dialogue with USTR rather than a 12.5% surcharge. (ustr.gov) (chinastrategy.org)