Even as American negotiators were sitting across the table in New Delhi this week discussing the contours of an interim trade agreement, Washington simultaneously unveiled additional Section 301 tariff proposals against India and 60 other countries.
The timing itself reveals the real nature of Donald Trump’s trade doctrine: negotiate quickly, concede selectively and remember that America retains escalation dominance throughout the process. Trump may call Narendra Modi a “good friend”, but the US is increasingly behaving less like a partner and more like a landlord collecting rent from its tenants.
The proposed additional Section 301 tariffs are not universal. They are aimed at a select group of 60 economies that the US Trade Representative claims are not adequately stopping imports of goods or components allegedly linked to forced labor supply chains, especially those connected to China and its intermediates from entering American markets.
India is reportedly placed in the higher-risk 12.5% tariff category. Some of the targeted countries, like Indonesia, Thailand, Vietnam and other Latin American nations, face lower additional duties of around 5-10%. What is striking is that many of these countries are precisely the economies that global companies have been shifting toward as alternatives to China.
India may not have been uniquely targeted, but it will not view this as normal partnership behavior. If the US genuinely considered India as an equal strategic partner, such sensitive disputes would have been addressed through quiet consultations and joint verification mechanisms. Instead, it chose public signaling during active negotiations, a classic example of America’s new coercive playbook.
For India, sectors vulnerable to scrutiny include solar panels, pharma, electronics, textiles and garments and intermediate industrial inputs sourced from China.
Even if one accepts Washington’s argument that some Indian imports may contain components linked to forced labor supply chains originating in China, why is the US effectively outsourcing the burden of its China policy onto third countries?
If America believes forced labor violations are occurring in China, then logically the primary target should be China itself through direct sanctions, targeted penalties, import bans and multilateral enforcement mechanisms.
Washington is increasingly threatening intermediary economies like India, Vietnam, Mexico and others for failing to police global supply chains according to American standards and strategic priorities. This shifts the cost of America’s geopolitical confrontation with China onto the rest of the world.
Under this approach, countries are no longer merely expected to comply with international trade norms, but also as enforcement arms of American strategic policy. Washington expects other economies to redesign supply chains, increase compliance costs, alter sourcing networks and absorb commercial disruption, all to serve a larger US-China economic contest.
That is where the issue stops being purely about labor rights and starts looking like geopolitical restructuring. Notably, countries with strong labor standards are also included. Clearly, the US is not merely regulating imports into America, but increasingly attempting to regulate how global trade itself is organized.
No-limit tariffs
If the proposed additional Section 301 tariffs are confirmed in their current form, the effective tariff burden on many Indian exports to the US could potentially rise significantly to a ridiculous 40.5%, comprising 10% baseline, 18% reciprocal tariffs and 12.5%.
The real problem is no longer the tariff number itself. It is the emergence of a permanently unstable trade relationship where America reserves the right to continuously invent new layers of pressure even while negotiations are underway.
Today, it could be “overcapacity” penalties or carbon-linked duties or national-security restrictions on another day. Under Trump’s trade doctrine, tariffs are no longer temporary corrective tools. They are becoming a permanent instrument of rolling leverage.
India also has to contend with other potential impediments. On digital trade, Washington wants India to dilute data localization rules and reduce regulatory constraints on American technology companies.
At first glance, this appears to be a simple trade concession. In reality, it could gradually place India’s digital economy — payments, cloud infrastructure, consumer data and AI ecosystems — under overwhelming dependence on a handful of American corporations.
The same risk exists in e-commerce. If India opens the sector too aggressively without safeguards, giant American platforms with deep capital reserves could overwhelm domestic retail networks. Pharmaceuticals are another example. The US has consistently pushed for stricter intellectual property protections beyond standard WTO obligations.
If India accepts excessively rigid patent regimes under FTA pressure, Indian generic drug manufacturers could face higher barriers that could delay affordable medicines and strengthen the monopoly power of large Western pharmaceutical companies.
Agriculture presents an even more politically explosive danger. American agribusiness operates at an enormous scale and benefits from heavy subsidies. If India opens sensitive agricultural sectors too rapidly under an FTA, millions of small Indian farmers could struggle to compete with highly mechanized, subsidized imports.
Defense and technology partnerships also carry hidden dependencies. America increasingly positions itself as India’s strategic technology partner while simultaneously retaining the ability to impose export controls, sanctions or supply restrictions whenever political disagreements arise.
Even manufacturing incentives could become vulnerable. Suppose India builds export-oriented sectors heavily integrated into American supply chains after signing an FTA. Future US administrations could still invoke “national security,” “labor violations,” “carbon standards” or “overcapacity” clauses to selectively restrict Indian exports whenever politically convenient.
India would have opened its markets permanently, while America would preserve the right to weaponize access conditionally.
So why sign the FTA?
All in all, India would be making a strategic mistake if it blindly rushes into a free trade agreement with the US. A poorly negotiated FTA could lock India into an unequal economic partnership in which the US retains coercive flexibility while India irreversibly opens critical sectors.
Trump’s recent tariff threats, Section 301 pressure and “forced labor” investigations have exposed the uncomfortable reality that the US is no longer approaching trade as a cooperative framework between partners.
For years, Indian policymakers viewed closer economic integration with America as a natural extension of the strategic partnership. The assumption was that shared concerns about China, defense cooperation and Indo-Pacific convergence would gradually create a more stable economic relationship.
Trump has demolished the belief by hinting that strategic convergence does not automatically guarantee economic respect. Under the circumstances, India will find it hard to negotiate from a position of strength. At the same time, walking away entirely would also be shortsighted.
Despite all the rhetoric, India still benefits enormously from a deeper integration with American capital, supply chains, innovation networks and advanced manufacturing ecosystems. A carefully negotiated trade framework could help Indian exports, electronics manufacturing, services and high-end industrial sectors.
But neither should it postpone in protest. A smarter approach for New Delhi would be to slow the process and recalibrate the terms of engagement.
India must insist on certain principles before moving forward, such as predictable tariff rules, clear dispute mechanisms, protection against arbitrary unilateral actions, technology-sharing commitments, smoother, broader mobility access for skilled professionals, and genuine reciprocity in sensitive sectors, among others.
Trump has shattered the illusion of many in New Delhi that America’s need for India against China would create a stable, long-term accommodation. In his framework, India can simultaneously be a strategic partner, a defense buyer, an anti-China counterweight and an economic target.
That is why India must develop a thicker skin and engage with America dispassionately, professionally and with no illusions.
Raghu Gururaj is a retired Indian ambassador and former foreign service officer
