How the new US tariffs stack India against its competitors

📌 Summary:

• Context: After the US Supreme Court declared its IEEPA (International Emergency Economic Powers Act) tariffs illegal in February, the Trump administration is rebuilding them under Section 301 of the US Trade Act, 1974
• New tariffs (from Friday) target 60 major exporters to the US, ostensibly for failing to curb imports of goods made with forced labour; the real target is China, to force countries to cut dependence on it (US alleges forced prison labour in Xinjiang enters global supply chains)
• India's position: India faces 10% tariff, down from 12.5% proposed in March, placing it in the second-most-favourable grouping alongside 16 other economies
• Why India got a lower rate: over a year of India-US negotiations, stepped-up Indian energy imports from the US, lowered duties on some US goods, and India's June 14 amendment to its foreign trade policy explicitly banning import of forced-labour goods (which the USTR treated as a policy improvement)
• Structure: A four-tier tariff structure that, despite the forced-labour rationale, appears drawn along geopolitical lines — EU and Taiwan most favoured, Vietnam among the least; further Section 301 investigations (including on excess manufacturing capacity) are ongoing

🎯 UPSC Relevance: GS2 (International Relations — India-US trade, global trade architecture) and GS3 (Economy — external sector, export competitiveness)

📝 Prelims Facts:

• Section 301 of the US Trade Act, 1974 is the legal basis for the new tariffs (after IEEPA tariffs were struck down)
• India's tariff: 10% (down from 12.5%); most-favoured grouping = EU and Taiwan
• India amended its foreign trade policy on June 14 to ban import of forced-labour goods

🔑 Key Term: Section 301 — a provision of US trade law allowing the USTR to investigate and retaliate against foreign trade practices deemed unfair