New Delhi, July 25 -- The US on Friday levied a 10% additional tariff on Indian imports, which is 2.5 percentage points lower than Washington initially proposed as action against alleged shipping of goods manufacture by using forced labour, thus India's comparative advantage in the American market remains intact. The Trump administration announced fresh additional levies ranging up to 12.5% for 60 countries hours before its temporary 10% tariff imposed on February 20 on all trading partners under Section 122 of the US Trade Act of 1974 expired on July 24. The additional tariff is over and above the prevailing MFN rate. According to a White House statement, the US Trade Representative (USTR) is directed to impose a tariff of 10% on goods of Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, the United Kingdom, and Trinidad and Tobago. While there are some specific tariff rate mechanisms for certain countries such as the European Union, Taiwan, Japan, South Korea and Switzerland; for goods of all other investigated economies (about 38) would attract an additional levy of 12.5%. These include Vietnam and China - accused by the US of flouting the Uyghur Forced Labour Prevention Act (UFLPA). The Section 301 investigation on forced labour that was launched by the USTR on March 12, after preliminary investigation proposed imposing an additional tariff of up to 12.5% on imports from 54 countries on June 2. This included India. While it proposed six others, including Indonesia and Pakistan, a 10% duty. But India's representations in April, May and early July, and New Delhi's July 14 decision to ban the import of goods produced wholly or partly through forced labour helped in a substantial reduction in the proposed tariff of 12.5% to actual tariff of 10%, people aware of the development said, requesting anonymity. They said even the currently levies new tariffs under the Section 301 is both temporary and partial. India is facing another ongoing investigation of the USTR related to alleged excess industrial capacity. While both the investigations were launched in March 2026, the one related to forced labour has been concluded on July 24 with specific action, the other related to the excess industrial capacity involving 16 countries are still pending. This has potential to erode India's competitiveness against its key competitors such as China, Vietnam, Indonesia, Malaysia, Sri Lanka and Bangladesh, they said. India and the US are, however, engaged to finalise an interim bilateral trade agreement (BTA) based on an agreed framework of February 7. The framework, which is yet to become a legal pact, envisages reducing the effective tariff burden on Indian exports to 18% from about 50% (including the Liberation Day tariff), dropping the proposed penalty linked to India's purchases of Russian oil, while India would reduce or eliminate duties on selected US industrial goods and certain agricultural products, including limited imports of dried distillers' grains and red sorghum for animal feed. India would also commit to purchasing $500 billion worth of US goods over five years. The framework could not immediately be translated into a formal agreement after the US Supreme Court, on February 20, struck down the Trump administration's use of the International Emergency Economic Powers Act (IEEPA) as the legal basis for reciprocal tariffs. As the legal basis of tariff is to be finalized, the two partners are expected to maintain the competitive edge with a bit lower tariff compared to key competitors, the people mentioned above said. The proposed BTA is expected to resolve all these issues, they added. Experts called India's proactive approach as a major achievement because the US is country's the top export destination. "India secured the lower 10% tariff, down from the 12.5% rate proposed in the USTR's draft, after introducing measures to prohibit imports made with forced labour. On June 14, 2026, India amended its Foreign Trade Policy to ban the import of goods produced using forced or compulsory labour. The USTR considered this a policy improvement, placing India in the lower-tariff category alongside 16 other economies," Global Trade Research Initiative (GTRI) founder Ajay Srivastava said. According to him, the US tariffs on Indian exports now fall into three broad categories. First, products covered by Section 232-including steel, aluminium, copper, auto components and certain derivative products, accounting for about 8% of India's exports- face 25% or 50% tariffs in addition to the normal U.S. MFN duty. Second, a limited set of exempted products continues to pay only the normal MFN tariff. And, third, the remaining about 70% of India's exports-including engineering goods, textiles and garments, chemicals, machinery, plastics, leather products, gems and jewellery, furniture and most other manufactured goods-are subject to the 10% Section 301 forced-labour tariff in addition to the applicable MFN duty....