New Delhi: In a widely anticipated move, the US Trade Representative on Tuesday proposed 12.5% ​​tariffs on exports from 54 countries, including India and China, accusing them of failure to ban imports of goods using forced labour.The announcement came as US officials are in India to discuss details of the framework agreement, which Commerce and Industry Minister Piyush Goyal said was close to finalization.The USTR is also expected to release its report on a second investigation launched – dealing with excess capacity in 16 countries including India – which is being seen as a move to replace the temporary 10% till July 24.In a statement, the Ministry of Commerce and Industry said: “India has engaged with the US on this matter as a part of Section 301 proceedings. As announced on 2 February 2026 and as per the joint statement issued on 7 February 2026, India is parallelly engaged with the US to finalize a framework agreement. In their submissions to the USTR, government agencies and businesses had rejected the allegations and called the investigation unfair, arguing that it was an issue on which there were global regulations.Government officials, who have held several rounds of discussions with their US counterparts over the past few months, were expecting the US to rely on Section 301 to impose additional tariffs, a key policy lever for the Trump administration’s efforts to discourage exports and force countries to negotiate duties bilaterally.The government has said it will agree to bilaterally negotiated rates if India has a comparative advantage over rival countries.Forced labor at risk in many key export sectors: USTRWhile India, Britain, China, Japan, Switzerland, Bangladesh, Sri Lanka and Vietnam face 12.5% ​​tariffs, six countries – the EU, Pakistan, Canada, Mexico, Indonesia and Ecuador – face the possibility of an additional 10% tariff.In its report, USTR alleged that there was evidence of the use of forced labor in cotton and polysilicone in the supply chain in China, which was used by other countries under investigation. It also notes that steel, aluminum, automobiles and auto parts, electronics, and agriculture, which are often part of trans-shipment practices, are often at risk of forced labor. It said that these practices have affected American goods.USTR said in its report, with similar findings for each country, “…the results of this investigation indicate that India’s actions, policies, and practices related to the imposition and failure to effectively enforce forced labor importation restrictions are unfair and burden or restrict U.S. commerce.”Now, the agency has sought comments till July 6 and will hold a hearing on July 7 before deciding the final action.