India, US remain engaged on trade as most exports face 10% forced-labour tariff plus normal duties
Indian exports currently face a 10% Section 301 forced-labour tariff in the US, in addition to applicable Most Favoured Nation (MFN) duties. India is among 17 economies facing the 10% levy, while 43 countries have been subjected to a higher tariff of 12.5%.
The US Trade Representative (USTR) had concluded that 60 economies failed to adequately prohibit or enforce restrictions on goods produced using forced labour.
India has also not received a tariff-rate quota (TRQ) exemption for textile and apparel exports under the new Section 301 regime. Specified volumes of textile and apparel exports from Bangladesh, Cambodia, Indonesia and Malaysia using US-origin cotton and fibre have been granted exemptions.
Normal MFN tariffs in the US average around 2.8% on a trade-weighted basis for most Indian exports, though separate tariff regimes apply to products such as steel, aluminium, copper and auto components.
How US tariffs apply to Indian exports
Indian exports to the US now broadly fall into three categories.
Products covered by Section 232, including steel, aluminium, copper, auto components and their derivatives, face tariffs ranging from 25% to 50% in addition to applicable MFN duties. These products account for around 8% of India’s exports to the US.
A much larger group, accounting for around 70% of India’s exports, faces the 10% Section 301 forced-labour tariff on top of applicable MFN duties. This includes engineering goods, textiles and garments, chemicals, machinery, plastics, leather products, gems and jewellery, furniture and several other manufactured products.
A limited set of exempted products will continue to face only the normal MFN tariff.
The developments come even as India and the US continue negotiations over a bilateral trade agreement. India’s Commerce Secretary has said the framework for the proposed agreement has been finalised and that the deal will be signed at the appropriate time.
Russian oil bill adds another tariff risk
Separately, Indian exporters could face another potential tariff threat after the US Senate overwhelmingly approved legislation that allows additional duties of up to 100% on goods from countries that continue purchasing Russian energy.
The Senate passed the bipartisan Lindsay O. Graham Sanctioning Russia and Iran Act of 2025 on August 7 by an 86-11 vote.
The legislation now returns to the House of Representatives. The Senate used H.R. 5334, an earlier House bill, to carry the sanctions package. When the House reconvenes on August 31, it can approve, amend or reject the Senate version. Any amendments would require the two chambers to agree on identical legislation before it can be sent to President Donald Trump.
Importantly, the bill does not automatically impose a 100% tariff on India.
Section 113 allows the US President to impose additional tariffs of up to 100% on goods from countries that continue buying Russian crude oil or natural gas 30 days after the legislation takes effect.
The bill’s sponsors have identified China, India, Slovakia, Hungary and Azerbaijan as the five largest buyers of Russian crude. Any new tariff would be imposed on top of existing US duties, including those under Sections 301 and 232 as well as antidumping and countervailing duties.
The US Trade Representative would have the flexibility to set the additional tariff at a level above zero and up to 100%, depending partly on whether a country increases, reduces or stops its purchases of Russian energy.
The legislation therefore gives Washington considerable discretion over how individual countries are treated.
Russian crude remains important for India
Washington has previously imposed Russia-related tariffs specifically on India. In July 2025, the US imposed an additional 25% tariff on Indian goods over its purchases of Russian energy before withdrawing the levy in February 2026.
Russia accounted for 30.3% of India’s crude imports in FY2026. India imported $40.8 billion worth of Russian crude during the year out of total crude imports of $134.7 billion.
Discounted Russian oil has helped India lower its import costs, diversify energy supplies and contain inflationary pressures.
At the same time, India has been increasing energy purchases from the US. Indian crude imports from the US rose from $6.6 billion to $9.1 billion in FY2026, while total US energy purchases reached $12.5 billion.
These purchases included LNG worth $1.4 billion, LPG worth $896 million and petroleum coke worth $861 million.