The latest American tariff order is commonly described as a Super 301 action. Formally, it is a Section 301 measure directed at countries that Washington says have failed to block imports produced with forced labour. India will face an additional duty of 10% rather than the 12.5% originally proposed. That is a diplomatic gain, but an expensive one. About 55% of Indian goods exported to the United States will still bear the new levy over and above the normal tariff.
India secured the lower rate after prohibiting imports made wholly or partly with forced labour. The order does not accuse Indian exporters of using forced labour. It penalises India for what the United States regards as an inadequate national import-control system. This distinction matters because Washington has imposed a country-wide tax without establishing wrongdoing by the Indian goods being taxed. USTR has published little country-specific evidence explaining why such a broad tariff is proportionate.
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The tariff cannot be dismissed as a small irritation. The United States imported goods worth $103.8 billion from India in 2025, an increase of almost 19% over the previous year. It is India’s largest market for several labour-intensive and manufactured products. Importers legally pay the duty, but contracts will determine how much is passed back through lower prices, smaller orders or demands for cost sharing.
Super 301 and India: A relative advantage
India’s consolation is that several competitors have been treated worse. China, Vietnam, Thailand, Türkiye, the Philippines and Brazil are in the 12.5% group. A 2.5 percentage-point difference may help an Indian supplier when products are similar, margins are thin and an American buyer can change sources without disrupting production.
The advantage is narrower than the headline suggests. Bangladesh, Pakistan, Sri Lanka, Cambodia, Indonesia and Malaysia face the same 10% rate as India. Goods from the European Union and Taiwan will pay no more than a combined MFN and Section 301 tariff of 10%. The corresponding ceiling for Japan, South Korea and Switzerland is 12.5%. An Indian exporter with a normal MFN duty of 8% could therefore pay 18%, while an equivalent European product would pay no more than 10%. Country rankings are a poor substitute for tariff-line calculations.
There are also substantial exclusions. Generic pharmaceuticals, smartphones and specified products remain outside the additional duty. Goods already covered by Section 232 measures, including steel, aluminium and some auto parts, are also excluded from this action, although they continue to face their existing tariffs. The commerce ministry estimates that these exclusions protect 45% of Indian exports to the United States.
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That leaves engineering products, machinery, chemicals, plastics, leather goods, furniture, textiles and gems and jewellery exposed in varying degrees. Engineering exporters must first establish whether a component falls under Section 232. Two parts used in the same machine may receive different treatment. Bulk chemicals will find it harder to absorb the duty than specialised products for which buyers have fewer alternatives. Jewellery faces the harshest arithmetic: a 10% tax on a high-value product can exceed the exporter’s margin.
Textiles present the clearest policy failure. India faces the same headline tariff as Bangladesh, Cambodia, Indonesia and Malaysia. The United States has, however, directed USTR to create tariff-rate quotas under which specified textile and apparel imports from those four countries may enter free of the Section 301 duty when linked to purchases of American cotton and textile inputs. India, whose textile and apparel exports to the US are worth nearly $11 billion a year, has been left out. The size and rules of the quotas have not yet been announced, but the discrimination is already written into the mechanism.
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India-US trade needs enforceable terms
Exporters should resist demands for an automatic 10% price reduction. Their bargaining position depends on the buyer’s alternatives. An American importer gains little by replacing an Indian supplier with one from a country facing the same or a higher tariff. Firms need order-wise calculations based on the US tariff code, the MFN rate, applicable exclusions and the duties borne by competing origins. Vague sectoral assurances will not survive a customs assessment.
The compliance burden will also rise. American buyers are likely to seek records covering wages, contractors, subcontractors and the origin of cotton, minerals, polysilicon and other sensitive inputs. Such documents will not remove the country tariff, but their absence could cost an exporter the contract. India’s relative advantage over China or Vietnam will count only when the Indian supplier can establish origin and deliver on time.
New Delhi should press for India’s inclusion in the textile mechanism and demand transparent criteria for removing the 10% duty. The bilateral trade agreement offers a forum, but it should not become an exchange in which India grants permanent market access while the United States retains an open-ended power to restore tariffs through another investigation. USTR is already pursuing a separate Section 301 inquiry into industrial overcapacity involving several major trading partners.
The lower tariff tier gives Indian exporters some room to win orders from countries taxed at 12.5%. It does not provide secure access to the American market. An India-US trade agreement that leaves discretionary tariffs untouched would settle today’s rate and preserve tomorrow’s uncertainty.