The Trump administration has replaced temporary Section 122 tariffs with permanent Section 301 duties, ensuring that additional duties on many imports, including those from India, continue beyond the July 24 deadline. According to The Times of India, US President Donald Trump on Thursday imposed fresh tariffs on imports from 60 economies over concerns related to forced labour practices, with the new tariffs taking effect at 12.01 am EDT on Friday. US Trade Representative Jamieson Greer announced the revised tariffs on Thursday, one day before the expiry of the temporary additional 10% duties that had been imposed on imports from all countries. The new tariffs replaced the temporary 10% blanket tariff that expires at the same time, providing continuity in trade policy. Section 122 allows temporary tariffs of up to 15% for 150 days to address balance-of-payments concerns, but the administration shifted to Section 301, which permits tariffs following formal trade investigations without the same statutory time limit. The move follows the expiry of the 10% tariff imposed under Section 122, which automatically lapsed after completing its statutory 150-day period. India faces a 10% tariff under Section 301, compared with the 12.5% duty imposed on most of the investigated economies, qualifying for the lower rate because it has introduced measures to restrict imports made using forced labour. As reported by The Times of India, goods already in transit before the deadline will remain exempt until July 28, providing a transition period for existing shipments.
The Federation of Indian Export Organisations (FIEO) has provided detailed analysis of how the new tariff structure will affect Indian exporters. S C Ralhan, President of FIEO, stated that "while the additional 10 per cent Section 301 tariff imposed by the United States on imports from India will increase the landed cost of Indian products, the overall impact should be viewed in the proper competitive perspective rather than through the headline tariff alone." According to Business Standard, India has been placed in the lower 10% tariff category, while several competing exporting nations including China, Vietnam, Thailand, Turkiye, UAE, Brazil, South Africa and others face a higher tariff of 12.5%. This competitive advantage is particularly significant for Indian exporters in labour-intensive sectors. Ralhan noted that many 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. "Consequently, Indian exporters largely retain their relative competitiveness in these sectors, as competing suppliers will face a similar duty incidence in the US market," he explained. FIEO has advised exporters to undertake product-wise assessment of the applicable US tariff, available exclusions and the tariff treatment of competing supplier countries rather than drawing broad conclusions based solely on the additional 10% tariff. Manoj Mishra from Grant Thornton Bharat notes that this relative tariff advantage could enhance India's competitiveness in sectors such as engineering goods, auto components, electronics, specialty chemicals, pharmaceuticals, medical devices, and textiles and apparel, where even modest tariff differentials can influence sourcing decisions.
During the public consultation process, Indian government officials and industry groups defended the country's record by citing constitutional provisions and other legal safeguards as evidence of India's efforts to address forced labour issues. According to The Times of India, India amended its foreign trade policy on June 14 to prohibit the import of goods produced using forced labour, following the unveiling of proposed tariffs in June. The USTR had initially indicated that India could face a 12.5% tariff under the forced labour investigation, with Washington arguing that India had not taken sufficient steps to prevent imports of goods produced through forced labour. However, India's constitutional provisions and legal safeguards against forced labour proved persuasive during the consultation process, resulting in the lower 10% rate. A US official told ANI that India had originally been slated for a 12.5% tariff, but following discussions on labour practices and New Delhi's policy changes, it was placed in the 10% category. As reported by Business Standard, the Office of the US Trade Representative stated in its final investigation report that the Trade Representative has determined to impose 10% tariffs on products of India, based on the findings in the investigation of India, including India's adoption of a forced labour import prohibition subsequent to the publication of the June 5, and considering the public comments and testimony, the advice of the Section 301 Committee, as well as the advice of advisory committees, and in accordance with the specific direction of the president. Ajay Srivastava from Global Trade Research Initiative (GTRI) believes that the tariff appears to serve primarily as a mechanism to preserve the Trump administration's tariff wall after the expiry of the temporary Section 122 tariffs, rather than as a targeted response to a proven forced-labour problem involving India. Economist Parekh rejected allegations of forced labour involving Indian exporters, calling them "absolutely baseless." He said India's labour laws are stringent and exporters have already furnished detailed information to the US authorities.
Economic experts emphasize that while the tariff reduction provides certainty, India's long-term export strategy should focus on diversification rather than relying on marginal tariff changes. Parekh stressed that widening India's export footprint would be the most effective safeguard against policy changes in any one country, stating "The best way to mitigate against US fluctuation is to diversify exports." Sharing a similar view, Vishwanath Pingali noted that investments in technology, government measures to strengthen manufacturing and efforts to tap new export markets would be critical to making Indian exports more competitive and reducing vulnerability to future tariff changes. As reported by The Times of India, the latest decision provides much-needed certainty after months of shifting tariff proposals, but stressed that sustained export growth will depend more on competitiveness and export diversification than on marginal changes in tariff rates. The tariff announcement comes even as India and the United States continue negotiations on a broader bilateral trade agreement, with both sides maintaining engagement despite the new tariff implementation. Manoj Mishra from Grant Thornton Bharat adds that while the additional tariff continues to increase export costs, India's improved relative position presents an opportunity for businesses to strengthen their presence in global supply chains while reinforcing compliance with evolving labour and ESG standards. The latest tariff comes against the backdrop of prolonged trade talks between New Delhi and Washington, with both sides working toward a broader bilateral trade agreement aimed at easing duties across a wider range of sectors. A final deal, if concluded on favourable terms, could help offset some of the pressure created by the current tariff regime and further strengthen India's position relative to competing supplier nations.
The forced labour investigation represents only the first completed Section 301 probe, with the USTR conducting another Section 301 investigation into structural excess manufacturing capacity in around 15 economies, including India. According to Business Standard, the Office of the USTR has another investigation against India underway that alleges excess capacity under Section 301 of the US Trade Act of 1974, which allows Washington to investigate and act against trade practices it considers harmful to US commerce. If it concludes that government policies have distorted global trade through industrial overcapacity, additional tariffs could follow. Separately, the Trump administration has proposed imposing a 100% tariff on imported generic medicines from August 2028, rising to 200% from August 2029, as part of efforts to boost pharmaceutical manufacturing in the United States. India is the largest exporter of finished generic medicines to the US, with industry estimates suggesting Indian companies account for around 40-50% of generic prescriptions dispensed there. The proposed tariffs give manufacturers a two-year window before duties begin but could have significant implications for Indian drugmakers that rely heavily on the US market. This pharmaceutical challenge is separate from earlier measures covering branded pharmaceutical products, with several multinational pharmaceutical companies having already secured exemptions from those tariffs. GTRI expert Ajay Srivastava warns that more tariffs could be imposed, noting that the Trump administration is expected to announce the results of another Section 301 investigation into excess manufacturing capacity, which could lead to additional tariffs on a wide range of industrial products. Analysts and government officials believe that this second investigation will be the starting point of negotiations for a trade agreement with countries to decide on new "reciprocal tariffs" after the previous one imposed by American president Donald Trump was trashed by the US Supreme Court in February.
