A tariff is no longer just a tax at the border. It is becoming a test of how a product was made, where its inputs came from and whether its supply chain can be trusted. The latest US move on forced labour imports is a warning that market access will increasingly come with political conditions attached.
The proposed measure, brought under Section 301 of the Trade Act of 1974, would apply to goods from 60 “economies”, a category that includes Hong Kong and the European Union. India falls in the higher duty category, with a range of its exports facing an additional 12.5% levy in the US market. The significance, however, lies beyond the rate itself. Washington is using domestic law to judge the adequacy of another country’s import control regime.
The charge is not that Indian exports use forced labour. It is that India does not do enough to detect tainted inputs before they enter Indian supply chains and later reach global markets, including the US.
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Forced labour is not lawful in India. But that answer will not satisfy Washington, which is focused on border enforcement and supply chain traceability. In plain language, the question is not whether India prohibits forced labour. It is whether India can prove the integrity of the inputs embedded in its exports. An ethical concern is being turned into a trade filter.
The objective of eliminating forced labour is legitimate. No serious economy should defend commerce built on coercion. A broad tariff across wide product categories is, however, a blunt remedy for what may be a product-specific and entity-specific problem. It risks becoming less about cleaning supply chains and more about controlling them.
The forced labour proposal is only one in a series of related measures now moving through Washington. A separate Section 301 investigation into structural excess capacity, which includes India in a list of 16 economies, is also underway. That inquiry may be more consequential because it reaches sectors central to India’s manufacturing ambitions, including textiles, automotive parts, solar manufacturing, petrochemicals and steel. Metals, critical minerals and pharmaceuticals are all being drawn into a wider trade security agenda.
There is a larger context, too. After the US Supreme Court curtailed the use of emergency powers for reciprocal tariffs, the Trump administration is searching for firmer legal ground. A temporary import surcharge expires in July unless Congress extends it. Section 301 and Section 232 thus matter beyond their immediate tariff impact. They show how Washington is rebuilding its trade architecture through older statutes with new political uses.
The pattern is unmistakable. Access to the American market is increasingly tied not only to tariffs, but also to labour, security and technology tests. Trade, politics and security now converge at US customs. The impact will be felt by a garment exporter in Tiruppur or a jewellery firm in Surat. A 12.5% duty can erase the margin on an order and push a buyer towards competitors facing lower tariffs.
The stakes are high. The US is India’s largest goods export destination. Any change in the terms of access will be felt in order books and margins. Yet India should neither panic nor posture. Sovereignty rhetoric will not protect firms that depend on the American market. Nor should India accept every American demand as the price of market access. India must oppose unfair pressure without sounding indifferent to the problem of forced labour.
India should say clearly that forced labour has no place in modern commerce. It should also acknowledge that supply chain traceability is emerging as a serious requirement of global trade. India cannot become an alternative to China by cost and scale alone. It must also become the more trusted manufacturing platform.
At the same time, one country’s regulatory preference cannot be allowed to become global law by the back door. If the issue is forced labour, the remedy must be targeted, evidence-based and proportionate. It cannot be a blanket penalty that damages honest exporters and weakens the very supply chain diversification Washington claims to support.
India must begin with the process available in Washington. It should file a detailed, product-specific submission and reserve its legal options, including at the WTO, while recognising that litigation alone will not protect exporters in the immediate term.
In the ongoing trade negotiations with the US, New Delhi should contest the 12.5% duty, seek broad product exclusions and insist that these duties do not stack on top of other tariffs. It cannot allow Washington to create multiple tariff layers and then ask India to negotiate each one away separately.
At home, India needs a credible forced labour import control regime of its own. It should be sovereign, country-neutral and evidence-based. In textiles, for example, India should build traceability from cotton to yarn to fabric to garment. For smaller exporters, the state will need to assist with compliance costs. Otherwise, the new rules will become an invisible tax on smaller firms.
For India, this is not only a trade matter. It is part of the manufacturing challenge. Factories alone will not be enough. Export success will depend on customs cooperation, supply chain documentation and constant engagement with foreign regulators. Development policy and trade diplomacy can no longer run on separate tracks.
India should be prepared for scrutiny, but not for unilateral rules written and applied as if they were global law. A country that wants to be a trusted manufacturing power must be able to prove the integrity of what it produces. But a country that wants strategic autonomy must also resist the use of morality as a mask for protectionism.
Tariffs are changing character. India cannot wish this trade order away, and it cannot enter it unprepared. It must build the systems to prove the integrity of its exports, the diplomacy to contest unfair measures, and the confidence to defend its manufacturing ambitions. In the new tariff age, trust will matter. So will leverage.
(The writer was a Permanent Representative of India to the UN and now serves as Dean, Kautilya School of Public Policy)
Disclaimer: These are the personal opinions of the author
