US Tariffs on India Under Section 301 Could Raise Costs for Textiles and More

India is going to face a new trade hurdle if the US adds extra duties on imports. Washington has proposed an additional 12.5% tariff on several goods from India. The move links to concerns about forced labour rules and enforcement. The Office of the US Trade Representative announced the proposal on June 2nd.

The plan is going to cover 60 economies that the US says have not banned such goods well. The duties are being considered under Section 301 of the Trade Act of 1974. If applied, the extra charge is going to sit on top of existing tariffs. That could raise landed costs for US importers of Indian products.

Under the draft, economies with forced labour import-blocking rules would face an extra 10% tariff. Economies without such rules would face a higher additional 12.5%. India falls in the 12.5% group under the proposal. The USTR said the investigation found weak bans or weak enforcement in the 60 economies.

For nearly a century, the United States has prohibited the importation of goods made with forced labor. It is time for our trading partners to follow suit.Today, Ambassador Greer determined that the acts, policies, and practices of 60 economies related to the failure to… pic.twitter.com/JWyRCDyXHL United States Trade Representative (@USTradeRep) June 3, 2026

The USTR said gaps in restrictions create an "unlevel playing field" for US workers. "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," said Ambassador Jamieson Greer in an official statement.

The proposal is not final and is going to move through consultations. According to the Official Statement, "interested parties can submit requests to participate in USTR hearings until June 22, 2026, while written comments can be filed until July 6, 2026. The USTR is scheduled to hold public hearings on the proposal on July 7, 2026."

US tariffs on India: Sectors likely to see higher US prices

The additional duty is going to affect many large Indian export segments if approved. The USTR flagged textiles, garments, thread and yarn as vulnerable to forced labour concerns. Other exposed categories include gems and jewellery, leather goods, seafood, automobiles, and auto components. The areas below summarise where US buyers could face higher prices.

Export segment	What could change in the US
Textiles & apparel	Ready-made garments, kurtas, home textiles, yarn, and thread could cost more.
Gems and jewellery	Extra tariffs could raise prices in a key destination market.
Leather goods	Footwear and leather products could become costlier for US buyers.
Seafood	Shrimp exports could face added pressure after earlier US measures.
Automobiles and components	Higher duties could lift costs for US purchasers of parts and vehicles.

The proposed move follows a policy reset after the US Supreme Court blocked an earlier tariff approach. After that decision, the Trump administration began seeking other ways to apply trade restrictions. This context matters for exporters assessing duration risk. Still, the present plan is only a proposal until the US completes the process.

US tariffs on India: Possible relief and current exemptions

Nothing in the plan automatically gets cheaper for Indian consumers or exporters. However, there is conditional relief for textiles if the US adopts a volume-based mechanism. "The U.S. Trade Representative also proposes a textile mechanism that would allow a certain volume of apparel and textile imports from certain economies to enter the United States at a reduced Section 301 tariff rate," the statement read.

Two sectors are currently exempted from the proposed additional tariffs: pharmaceuticals and Electronics. The final outcome is going to depend on what the US keeps after the July 6, 2026 comment deadline. Until the decision is made, Indian exporters in textiles, pharma, and electronics are likely to plan for the full 12.5% risk.