US'' 10% Duty on India: Tariff Wall, Not Forced Labor - GTRI

New Delhi, Jul 24 (PTI) The 10 per cent additional import duty imposed by the US on several countries, including India, appears to be aimed at preserving the Trump administration's tariff wall rather than addressing an unproven forced labour issue in India, economic think tank GTRI said on Friday.

The US has imposed a 10 per cent tariff on goods imported from India and 16 other countries as part of a wider action against products made using forced labour.

On June 3, when the US had proposed tariffs under Section 301 of the Trade Act, India was bracketed among countries attracting 12.5 per cent levies, but Washington took note of the amendment New Delhi made to its foreign trade policy prohibiting the import of goods produced using forced labour.

"The tariff lacks a credible factual basis and appears designed to preserve the Trump administration's tariff wall rather than address an unproven forced-labour problem in India," GTRI Founder Ajay Srivastava said.

The new tariff takes effect on July 24. It has replaced the temporary 10 per cent global tariffs, imposed under Section 122 for 150 days from February 24, that expired on Friday.

Goods loaded before July 24 and entered into the US by July 28 are exempt under a transition provision.

Srivastava also said that the tariff under the forced-labour investigation also lacks a credible factual basis as the US has not produced evidence that India imports goods made with forced labour.

In response to US concerns, India has already amended its Foreign Trade Policy to ban the import of goods produced using forced or compulsory labour, he said, adding that the Indian law also prohibits forced labour in domestic production through constitutional guarantees and labour statutes.

He added the President Donald Trump administration is expected to announce the results of another Section 301 investigation into excess manufacturing capacity, which could lead to additional tariffs on a wide range of industrial products.

These duties will be over and above the existing tariff a domestic product is facing in the American market.




EXEMPTIONS

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The GTRI said that the new tariffs exempt raw materials and agricultural inputs that the United States cannot produce in sufficient quantities, products whose taxation could cause inflation or supply disruptions, selected industrial inputs including certain plastic resins, medical supplies and metal products.

Goods that are already subject to Section 232 tariffs, and informational or humanitarian items such as books, personal baggage and donations, are outside the purview of the new 10 per cent duty.



US TARIFFS ON INDIA NOW

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US' additional duties on Indian exports now fall into three broad categories. First, products covered by Section 232 - including steel, aluminium, copper, auto components and certain derivative products, accounting for about 8 per cent of India's exports - face 25 per cent or 50 per cent tariffs in addition to the normal US MFN duty.

Second, a limited set of exempted products continues to pay only the normal MFN tariff.

Third, the remaining about 70 per cent of India's exports - including engineering goods, textiles and garments, chemicals, machinery, plastics, leather products, gems and jewellery, furniture and most other manufactured goods - are subject to the 10 per cent Section 301 forced-labour tariff in addition to the applicable MFN (most favoured nation) duty.