The Global Trade Research Initiative (GTRI) has called on India to challenge the proposed 12.5% additional tariff under the US Section 301 investigation, arguing that the action exceeds the scope of the provision. According to Business Standard, GTRI founder Ajay Srivastava stated that India must argue the US is attempting to impose its preferred import-control framework on other countries through unilateral trade measures, which is outside the scope of Section 301. The investigation focuses not on allegations that Indian exports use forced labour, but on whether India restricts imports linked to forced labour in third countries. Srivastava noted that concerns regarding forced labour, particularly in countries such as China, are often product-specific and that broad country-wide tariff actions are an inappropriate response when the problem could be limited to a few products. As per Business Standard, the latest concerns about forced labour are valid, but the finding that all major US trading partners fall short suggests the investigation may be serving as a basis for new tariffs rather than targeted enforcement.
The USTR's latest report identifies exposure across multiple sectors for India, extending beyond the headline tariff rate. As reported by Business Standard, the report flags vulnerabilities in aluminium, cotton, electronics, lithium-ion batteries, and rice, while also highlighting exports involving products linked to cotton, fish, palm oil, coffee, cocoa and nickel supply chains. The investigation covers industries such as solar modules, textiles, the health industry, automotive goods, petrochemicals, steel, and construction goods. This comprehensive exposure demonstrates that the USTR's recommendation cannot be separated from broader developments in US trade policy over the past year, with Washington turning to alternative legal routes after courts struck down the Trump administration's reciprocal tariffs imposed under emergency powers. The move underscores the unpredictability of US trade policy, which could prolong uncertainty, disrupt supply chains, and unsettle global commerce.
Indian exporters are closely monitoring the US Trade Representative's investigations and bilateral trade negotiations, with many expressing confidence that India will emerge at an advantage compared to competitors from other countries. As reported by The Times of India, Ajai Sahay, director general of Fieo, stated that India has a robust legal framework governing labour standards and committed to responsible business practices, with concerns able to be addressed through constructive dialogue. Puran Dawar, chairman of Dawar Group, emphasized that India's footwear and leather sector is not a forced-labour risk, describing it as a formal, employment-intensive, women-inclusive and globally audited manufacturing sector. However, exporters are particularly concerned about the same 12.5% levy on China, which they fear will weaken the China+1 sourcing opportunity that American buyers themselves are seeking. The proposal complicates ongoing trade negotiations and creates risks across several export sectors, with the move underscoring the unpredictability of US trade policy that could unsettle global commerce.
The Commerce Ministry has provided important clarifications about the proposed tariff measures, stating that the proposed tariffs are not yet final and highlighting significant exclusions from the proposal. As reported by Business Standard, the ministry noted that products already covered under Section 232 tariffs, along with certain other goods, have been excluded from the proposed action. The ministry also pointed to a special mechanism for textiles and apparel that could permit a specified volume of imports from selected economies to enter the US market at lower tariff rates. The clarification comes as stakeholders can still participate in the consultation process, with interested parties able to submit requests to appear at hearings and summaries of testimony by June 22, 2026, while written comments are due by July 6. The USTR is scheduled to hold hearings on July 7, with a final decision expected in late June or July, potentially before the expiry of the temporary Section 122 tariffs (10%) on July 24, 2026.
The United States and India will resume their bilateral trade negotiations from June 1-4, 2026 in New Delhi, with chief negotiators Brendan Lynch from the US and Darpan Jain from India leading the discussions. According to The Indian Express, the negotiations will focus on finalising the legal and operational framework of the proposed interim trade agreement, with discussions covering market access, customs and trade facilitation, non-tariff barriers, investment promotion and economic security cooperation. However, as reported by Business Standard, the USTR proposal has clearly made the ongoing trade negotiations more difficult. The government must effectively put forward its position with US negotiators, though the problem with the current US administration is that nothing can be taken as certain. The experience of other countries shows that the US can always impose new conditions even after a deal is done, with conditions likely to remain uncertain for some time. The move underscores the unpredictability of US trade policy, which could prolong uncertainty, disrupt supply chains, and unsettle global commerce.
The United States may spare India from additional Section 301 tariffs if a bilateral trade agreement is concluded by July 24, according to an official source. As reported by Business Standard, the advantage of signing now is that even if India is found to violate Section 301, the additional tariff will not be imposed. The tariff will remain at the pre-negotiated level of 18%, while other countries without trade deals face much higher tariffs. However, the latest developments have created new challenges, with the USTR proposal having made the ongoing trade negotiations more difficult. The tariff landscape has changed significantly as the US President announced the imposition of 10% tariffs on all countries for 150 days starting February 24, following the US Supreme Court's ruling against President Trump's sweeping reciprocal tariffs under the 1977 International Emergency Economic Powers Act. The move underscores the unpredictability of US trade policy, which could prolong uncertainty, disrupt supply chains, and unsettle global commerce.
