New Delhi, India – Ongoing trade talks between India and the United States have hit a significant roadblock following a report from the US Trade Representative (USTR) proposing additional tariffs on Indian goods. The USTR alleges that India is among 54 countries failing to legally prohibit the import of goods made with forced labor, recommending a 12.5% tariff rate.
Tariff Proposal Clouds Diplomatic Efforts
The contentious report emerges as a US delegation, led by Assistant USTR Brendan Lynch, is in New Delhi from June 1-4 to finalize an interim bilateral trade agreement (BTA). Both nations had previously indicated that the deal was nearing completion, with only a small fraction of negotiations remaining.
However, Indian sources have expressed that the proposed tariff rate and the broader Section 301 investigations must be addressed before any agreement can be finalized. India is particularly keen to understand the new tariff structure, especially after the US Supreme Court struck down previous reciprocal tariffs.
India Rejects Allegations, Seeks Investigation Drop
In response to investigations launched in March, India had firmly denied any allegations of failing to combat forced labor in its supply chains. New Delhi is now expected to submit further comments opposing the USTR's findings and has made it clear that the Section 301 investigations against it should be dropped, with no additional tariffs imposed.
USTR Jamieson Greer underscored the US position, stating, "The failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable. This creates a dynamic where American workers are forced to compete globally on an unlevel playing field."
Next Steps for USTR Investigations
The USTR has outlined a timeline for public input on its proposed actions. Interested parties can submit requests to appear at upcoming hearings by June 22, with written comments due by July 6. The agency plans to hold hearings in July before making a final decision on the proposed tariffs.
The USTR report lists India among 54 economies, including China, Brazil, Australia, Japan, and the UK, which it claims have failed to effectively enforce legal prohibitions against the importation of goods produced wholly or in part with forced labor.