India escapes worst US forced-labour tariffs, but trade deal still distant

India narrowly avoided the worst of Washington's latest tariff action after a timely policy change. The Trump administration, under Section 301 of the US Trade Act, targeted 60 economies for failing to curb imports made with forced labour. As late as last month, India faced a 12.5% rate, but a June 14 amendment to its foreign trade policy banning forced-labour imports led US Trade Representative Jamieson Greer to place India in the lower 10% tariff band—alongside Canada, Britain, Bangladesh, and Pakistan. Trade experts note that the factual basis for the tariff on India is questionable, but the reprieve is only a partial win.

Despite the lower tariff, analysts warn that significant work remains to secure a long-sought US-India trade deal. US demands on market access, intellectual property, and non-tariff barriers persist, while friction over India's continued purchases of Russian oil complicates negotiations. The tariffs replaced temporary global levies struck down by the Supreme Court in February, which had upended the previous 'Liberation Day' regime. With both sides still far apart, the 10% tariff may be a temporary cushion, not a final resolution.