Government Calls on USTR to Reassess Proposed New Tariffs

NEW DELHI: The Indian government has urged the U.S. Trade Representative (USTR) to reconsider its proposal for a 12.5% additional tariff on Indian products, citing concerns over forced labor. The government argues that the proposal does not meet legal standards, lacks a country-specific analysis, and fails to establish a causal link between the absence of import prohibitions and its impact on U.S. businesses. This submission comes ahead of hearings scheduled to begin on Tuesday.

Indian officials assert that addressing forced labor in global supply chains requires a combination of domestic enforcement of labor laws and a robust due diligence framework. This approach, they argue, includes risk mitigation and remedial measures. The government’s nine-page submission emphasizes that the USTR has not satisfied the legal standards outlined in section 301(d) of the U.S. Trade Act.

Several Indian companies, including Reliance Industries, Alok Industries, and Shahi Exports, have also opposed the proposed tariff. They view it as a replacement for the reciprocal tariffs imposed during Donald Trump’s administration, which were deemed illegal by the U.S. Supreme Court. Companies from Gujarat, such as Parth Foods and Hanumant Foods, which supply dehydrated onions and garlic to American firms, have warned that the tariff will lead to higher costs for U.S. consumers.

In its submission, the Indian commerce and industry ministry contends that the USTR has not provided sufficient evidence to demonstrate how the lack of forced labor import bans distorts market conditions or undermines the profitability of compliant firms. The government argues that findings must be supported by economy-specific evidence, which the USTR has failed to provide, relying instead on case studies and broad trade data.

The Indian government further claims that there is inadequate evidence linking the absence of a forced labor import ban to any unfair comparative advantage that harms U.S. industry. It points to examples from the USTR report, noting that American tobacco imports from India surged from $225,000 in 2021 to $3.5 million, while imports from Malawi remained at zero, indicating no adverse impact on U.S. commerce.

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