The United States imposed a fresh round of tariffs on 60 trading partners, replacing the temporary global tariff that had been in place for the past five months. US President Donald Trump has imposed a 10 per cent tariff on imports from India and 16 other nations as part of a global crackdown on goods produced using forced labour. India was bracketed among countries to face a higher 12.5 per cent levy. However, Washington reduced the rate to 10 per cent after taking note of New Delhiโs recent amendment to its Foreign Trade Policy, which explicitly banned the import of products made through forced or compulsory labour.
“As a result of these actions, the Trade Representative has advised me that the goods of these economies should be tariffed at the 10 per cent rate to further encourage these economies to effectively enforce such prohibitions,” US President Donald Trump said on the issue on Thursday.
How India secured the lower rate?
India wasn’t always in the 10 per cent bracket. When USTR first proposed the framework in June, India was initially placed in the higher 12.5 per cent tier. However, that changed after India’s Commerce Ministry amended its Foreign Trade Policy on June 14, restricting imports made through forced or coerced labour, directly addressing the concern at the centre.
India also pushed for the issue to be resolved through bilateral talks rather than unilateral tariffs, and continued diplomatic engagement with Washington through June and July. That combination, the policy change plus sustained outreach, was enough to convince US trade officials to reclassify India before Trump signed off on the new tariff structure on July 23.
The shift saves Indian exporters 2.5 percentage points compared to what was originally proposed, offering some relief for sectors like textiles, pharmaceuticals, engineering goods, and auto components. It also comes right after Washington dropped a separate 25 per cent penalty tariff tied to India’s Russian oil purchases, adding to a recent pattern of easing trade friction between the two countries.
Why does this matter for India-US trade?
US remains India’s largest export destination and second-largest overall trading partner. Bilateral goods trade hit roughly USD 141 billion in 2025, with Indian exports making up USD 87.3 billion of that figure.
Reports suggest more tariffs could be on the way soon, this time targeting countries accused of excess manufacturing capacity that floods global markets with cheap goods US companies can’t compete with, part of what looks like a broader effort by the Trump administration to rebuild tariff protections using legal routes less likely to face the kind of court defeat it suffered in February.
How do the tariff tiers work?
Countries seen as having weak or nonexistent legal safeguards against forced-labour goods, including China and Japan, were placed in the higher 12.5 per cent bracket. Countries that already enforce such bans, maintain partial restrictions, or have formally committed to building comparable frameworks, including India, Sri Lanka, and the EU, qualify for the lower 10 per cent rate.
However, a handful of categories, including goods covered under the US-Mexico-Canada Agreement and oil and gas imports, are exempted entirely from the tariffs. Shipments already in transit before the deadline get a short grace period, with exemptions running until July 28.
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