Final US Section 301 Measures on Forced Labour: India Placed in Lower Tariff Tier at 10%

Key Highlights:

• The United States Trade Representative (USTR) announced final Section 301 measures on July 23, 2026, targeting goods produced with forced labor from 60 economies, including India.
• India faces an additional 10% ad valorem duty on certain imports, a reduction from the initially proposed 12.5%.
• This lower tariff tier for India is a result of sustained engagement by the Government of India with the USTR.
• Approximately 45% of India's exports to the US, including generic pharmaceuticals and smartphones, remain exempt from this additional duty.
• The remaining 55% of exports will attract the 10% duty, which is comparatively lower than for most other affected economies.

Detailed Insights:

• The USTR investigation focused on acts, policies, and practices related to the imposition and enforcement of prohibitions on the importation of goods produced with forced labor.
• India's proactive engagement through detailed submissions and consultations helped secure a more favorable tariff outcome compared to other nations.
• Products already covered under Section 232 measures, such as steel, aluminum, and auto parts, are also exempt from the new Section 301 duties.
• A textile-specific mechanism mentioned in the final measures is yet to be established and operationalized.
• India continues to engage with the U.S. on this matter as part of ongoing negotiations for an India-U.S. Bilateral Trade Agreement.

Key Concepts Involved:

• Section 301 of the U.S. Trade Act, 1974: A provision allowing the USTR to investigate and take action against foreign trade practices deemed unfair or discriminatory.
• Ad valorem duty: A tariff or tax calculated as a percentage of the value of the imported goods.
• Section 232 measures: U.S. trade laws allowing the President to impose tariffs on imports if they are deemed a threat to national security.
• United States Trade Representative (USTR): The principal trade advisor, negotiator, and spokesperson for the U.S. President on trade issues.