Trump Targets 60 Nations With Fresh Tariffs, India Among 17 Economies In 10% Lower Slab

Washington: US President Donald Trump has announced a fresh round of import tariffs targeting 99% of trading partners, citing inadequate action to block goods made with forced labour. The new tariffs will come into force on Friday, expected to trigger another major escalation in Trump’s trade agenda globally. Pertinently, India has been placed in the lower tariff bracket of 10%, with the government officials claiming that New Delhi was initially in line for a 12.5% levy but managed to secure the reduced rate after productive discussions with Washington on labour practices.

The announcement was made by the Office of the US Trade Representative (USTR) on Thursday, which said that the action was taken by Ambassador Jamieson Greer at the direction of President Donald Trump, and affects 60 countries that the administration believed have failed to impose and enforce bans on imports produced with forced labour.

India Among 17 Nations Facing 10% Tariffs

According to the USTR, 17 nations will face the lower 10% tariff, including India, the United Kingdom (UK), Canada, Indonesia, Mexico and Bangladesh. It is claimed that India had originally been considered for a 12.5% tariff but was moved to the 10% category following constructive engagement with the US on labour practices.

The bigger duty structure covers major partners across regions, as the new duties, ranging from 10% to 12.5%, hit major trading partners including India, the UK, EU, Canada and Japan and take effect from Friday.

The USTR statement explained the rationale for the two-tier approach, saying, "10 percent is the appropriate rate of Section 301 duties for investigated economies that (i) impose a forced labor import prohibition; (ii) have committed to impose and enforce such a prohibition through an Agreement on Reciprocal Trade; or (iii) have imposed a partial regime with the effect of preventing the importation of certain forced labor goods. These economies are: Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom."

Apart from these 17 countries, a higher rate applies to the other economies, with the statement further noting, "10 percent or 12.5 percent, net of Most-Favored-Nation (MFN) rate is the appropriate rate of Section 301 duties for certain products of the European Union, Taiwan, Japan, Korea, and Switzerland that are not otherwise exempted...12.5 percent is the appropriate rate of Section 301 duty for all other investigated economies."

Trump’s Trade Push, Legal Basis

The tariffs are being imposed under Section 301 of the Trade Act of 1974, which gives the US Trade Representative authority to levy tariffs or other punitive measures against countries found to be engaging in unfair trade practices. The present move is the latest step in the global trade confrontation that President Trump reignited after returning to office in January last year. It follows an earlier ruling by the US Supreme Court that many tariffs imposed under emergency powers were unlawful, which pushed the administration to seek alternative legal routes to pursue its trade objectives.

The USTR asserted that the action followed months of groundwork to finalise the tariffs. In March this year, it launched investigations of 60 economies under Section 301(b) to examine whether their practices related to the failure to enforce a ban on the importation of goods produced with "forced labour". It was followed by consultations with over 45 governments and several public hearings. The office also stated that it received, reviewed, and analysed over 1600 written comments on the proposed responsive action.

Partners Must Enforce Forced Labour Bans

Ambassador Greer framed the tariffs as a moral and enforcement issue, saying, “President Trump recognizes that decades of moral suasion have not eradicated forced labor from global supply chains. The United States has had a forced labor import ban for nearly a century, and rigorously enforces it; it's well past time for our trading partners to do the same.”

He also struck a more conciliatory note towards countries that moved quickly, saying, "I am encouraged by the trading partners who have moved quickly to adopt forced labor import prohibitions, and look forward to ensuring their effective enforcement." 

The new slabs are set to take effect from Friday, as the announcement puts fresh pressure on supply chains and trade negotiations, while giving India a relatively better outcome than initially feared after the engagement with US officials on labour standards.