After the suspension of tariffs imposed under the International Emergency Economic Powers Act (IEEPA) of 1977, the US invoked Section 301 of the Trade Act of 1974 to investigate alleged excess capacity and forced labour, targeting several countries, including India. Recently, the Office of the United States Trade Representative (USTR) proposed to impose 12.5% tariffs on Indian imports due to alleged forced labour. Interestingly, the forced labour allegation is originally linked to China’s Uyghurs’ exploitation in the Xinjiang region. The allegation of ‘industrial overcapacity’ is also linked to China’s state-directed export activities.
However, expansion of the same to other countries, particularly India, is inappropriate, empirically unsupported, and theoretically inconsistent. This may revive a fresh wave of tariffs against India and may hit several sectors badly where India’s exports to the US are significant, particularly for sectors such as textiles and apparel, electronics, motor vehicles and equipment, solar modules, etc.
