Even as the U.S.’ temporary 10% tariffs come to an end today, it has announced permanent tariffs related to its investigation into forced labour on 60 of its trading partners, including India. India’s tariff rate remains at 10% instead of the proposed 12.5%.
The U.S. had in February 2026 imposed a temporary 150-day 10% tariff on all of its trade partners, which expired on July 24. In March, the office of the U.S. Trade Representative had also launched two separate investigations under Section 301 of the Trade Act, 1974.
The new tariffs announced late Thursday (July 23, 2026) night (India time) are a result of the findings of one of these investigations — the one on whether the U.S.’ trade partners were doing enough to prevent the import of goods made using forced labour.
The second investigation, into whether other economies were using excess manufacturing capacity to export to the U.S. in a manner that was hurting the U.S. economy, is still pending and could result in further tariffs.
“President Trump recognises that decades of moral suasion have not eradicated forced labour from global supply chains,” U.S. Trade Representative Jamieson Greer said in a statement. “The United States has had a forced labour import ban for nearly a century, and rigorously enforces it; it’s well past time for our trading partners to do the same.”
“Today’s action will begin to correct what is both a human rights abuse and a distortive trade practice to improve the welfare of workers everywhere,” he added.
The draft report of investigation, released in June, had proposed a 12.5% tariff on 54 countries, including India, as they had “failed to impose and effectively enforce” prohibitions on the import of goods produced using forced labour. However, earlier this month, the Indian government released a notification banning the import of goods made using forced labour.
“I am encouraged by the trading partners who have moved quickly to adopt forced labour import prohibitions, and look forward to ensuring their effective enforcement,” Mr. Greer said in his statement.
As a result of India’s actions, it has now been included among the countries that will face a 10% tariff instead of 12.5%.
These 10% tariffs will apply to countries that impose a forced labour import prohibition, have committed to impose and enforce such a prohibition through a trade agreement with the U.S., or have imposed a partial regime with the effect of preventing the import of certain forced labour goods.
These economies include India, Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom.
The U.S. will impose a 12.5% tariff on all other countries that it has investigated.
About 70% of India’s exports — including engineering goods, textiles and garments, chemicals, machinery, plastics, leather products, gems and jewellery, furniture and most other manufactured goods — will be subject to these 10% tariffs under Section 301 over and above the item-wise most-favoured nation (MFN) tariffs the U.S. levies on all its trading partners.
The Section 301 could potentially increase depending on the findings of the excess capacity investigation.
Products covered by Section 232 of the U.S. Trade Expansion Act, such as steel, aluminium, copper, auto components and certain derivative products, will continue to face 25% or 50% tariffs in addition to the normal U.S. MFN tariffs. These account for about 8% of India’s exports.
The U.S. Trade Representative has also exempted particular items from its latest 10% tariffs. These include raw materials that would become unavailable or cause economy-wide disruptions if the tariffs were imposed, and products that cannot be grown or produced in sufficient quantities or at reasonable prices in the U.S..
Further, certain products of Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, the European Union, Guatemala, Indonesia, Jordan, Malaysia, Switzerland, Taiwan, and the United Kingdom have been exempted as they “would encourage these economies to fulfill commitments regarding forced labor import prohibitions”.
A few Indian industry and exporter bodies have reacted to the 10% tariff, with some saying that this would make Indian goods more expensive, and others saying that even if this were to happen, Indian goods are still competitively taxed and so India will not lose an edge.
“The fact that India has been placed in the lower 10% tariff category, while several competing exporting nations including China, Vietnam, Thailand, Türkiye, UAE, Brazil, South Africa and others face a higher tariff of 12.5%, reflects the recognition by the U.S. of the policy measures taken by the Government of India to strengthen its framework relating to forced labour,” S.C. Ralhan, president of the Federation of Indian Export Organisations said.
“This has helped India secure a relatively favourable position compared to many of its global competitors,” he added.
He added that several of India’s direct competitors in labour-intensive sectors such as textiles, garments, leather and footwear — including Bangladesh, Cambodia, Pakistan, Sri Lanka, Indonesia and Malaysia — have also been subjected to the same 10% tariff as India has.
“Consequently, Indian exporters largely retain their relative competitiveness in these sectors, as competing suppliers will face a similar duty incidence in the U.S. market,” Mr. Ralhan said.
Rajesh Rokde, chairman of the All India Gem and Jewellery Domestic Council is not as optimistic.
“The U.S. government’s decision… will undoubtedly create challenges for our gem and jewellery exporters, making Indian products less price-competitive in one of our largest markets,” Mr. Rokde said. “While the rate is lower than that imposed on some other countries, this measure still places significant pressure on margins and could dent the growth trajectory of our industry.”
Published - July 24, 2026 04:39 am IST