Trump hits China, Israel with 12.5% new tariffs. Why did he put India at 10%?

The Trump administration has unveiled another round of tariffs on imports from dozens of trading partners, but this time the justification is markedly different. Instead of citing trade deficits or national security, Washington has linked the new duties to the enforcement of laws against goods produced through forced labour. While the move is framed as a human rights measure, it also reinforces the administration's broader strategy of reshaping global supply chains and protecting domestic manufacturing through trade barriers.

The latest order imposes tariffs of 10 per cent or 12.5 per cent on imports from more than 60 economies, including India, China, the United Kingdom, Japan and members of the European Union. The rate depends not merely on whether a country has laws prohibiting imports made with forced labour, but also on how effectively those laws are implemented. Nations that have enacted such prohibitions, including India, will face a lower 10 per cent tariff, while countries that either lack comparable legislation or are deemed to have weak legal frameworks will attract a higher 12.5 per cent duty.

Legal Reset

The announcement comes against the backdrop of an important legal setback for President Donald Trump's trade agenda. Earlier this year, the US Supreme Court invalidated the sweeping "Liberation Day" tariffs announced in April 2025, forcing the administration to rely on alternative statutory powers to maintain import duties. A temporary 10 per cent surcharge was introduced as an interim measure, expiring this week. The new forced labour tariffs effectively replace that arrangement while providing a different legal rationale that the White House believes is more defensible in court.

Administration officials argue that the United States has prohibited imports produced through forced labour for decades and has actively enforced those restrictions. Their contention is that countries failing to establish or implement similar safeguards create an uneven trading environment by allowing artificially cheap goods into international markets.

This represents a notable evolution in American trade policy. Human rights concerns, once largely addressed through targeted sanctions or import bans against individual companies, are now being integrated into a broader tariff regime affecting entire economies.

India Escapes Additional Burden

For India, the immediate commercial impact appears limited. The overall tariff burden remains at 10 per cent, avoiding the additional 12.5 per cent penalty that had been under consideration.

The White House cited India's decision to introduce restrictions on imports made through forced labour as a key reason for assigning the lower tariff rate. Washington nevertheless indicated that future tariff treatment will depend on how effectively those prohibitions are enforced rather than merely existing on paper.

That distinction is significant. The new framework effectively creates a compliance-based trade regime in which legislative reforms alone may not be sufficient. Countries could face additional scrutiny over customs enforcement, regulatory capacity, investigations and prosecution of forced labour-linked imports.

For Indian exporters, this means the immediate tariff outcome is stable, but the compliance burden may increase substantially as American authorities evaluate implementation.

Beyond Human Rights

Although the administration has presented the tariffs primarily as a measure against forced labour, the economic objectives are equally apparent.

President Trump has consistently argued that inexpensive imports undermine American industry by encouraging manufacturers to shift production overseas. Linking tariffs to labour standards enables Washington to pursue industrial policy while framing the measures within a broader ethical narrative.

This approach also places pressure on multinational companies to reassess sourcing decisions. Businesses importing intermediate goods into the United States may increasingly prioritise suppliers located in jurisdictions that maintain stronger labour enforcement systems, thereby reducing regulatory uncertainty.

The policy therefore functions simultaneously as a human rights instrument, an industrial strategy and a supply-chain restructuring mechanism.

Another Tariff Wave Ahead

The forced labour tariffs are unlikely to mark the end of the administration's trade offensive. Reports indicate that Washington is preparing another round of import duties targeting countries accused of subsidising excess industrial capacity, particularly where state support leads to global oversupply and lower-priced exports.

Such measures would broaden the administration's protectionist agenda beyond labour standards into industrial subsidies, creating another layer of trade restrictions.

If implemented, exporters could face overlapping tariff regimes based on multiple policy objectives, including labour practices, manufacturing subsidies, strategic industries and national security concerns.

Changing Rules of Global Trade

The latest announcement illustrates how global trade policy is becoming increasingly intertwined with non-trade issues. Labour rights, environmental standards, industrial policy and geopolitical competition are now influencing tariff decisions as much as traditional economic considerations.

For countries such as India, maintaining market access may increasingly depend not only on competitive pricing but also on demonstrating credible enforcement of labour regulations and supply-chain transparency.

Whether these measures genuinely improve labour conditions or primarily serve as instruments of economic protectionism remains open to debate. What is clear, however, is that the United States is expanding the range of policy tools it uses to shape international commerce. As legal challenges constrain one avenue for tariffs, the administration is finding new justifications to pursue the same strategic objective: reducing dependence on foreign manufacturing while encouraging production closer to home.