India Tariffs: Trump’s Trade Policy
India’s tariff exposure to the United States has been reduced to 10%, down from the previously announced 18%, after US President Donald Trump introduced a new temporary global levy. The move came shortly after the US Supreme Court struck down his broader india tariffs authority under a decades-old emergency law.
The White House confirmed that countries — including India — that had earlier negotiated tariff arrangements with the US will now be subject to a flat 10% duty under Section 122 of the Trade Act of 1974. This provision allows the US President to impose temporary tariffs of up to 15% for 150 days to address significant balance-of-payments deficits.
Why the Change Happened
Earlier, Trump had relied on the International Emergency Economic Powers Act (IEEPA) of 1977 to impose reciprocal tariffs, including an 18% rate on India. However, the Supreme Court ruled in a 6–3 decision that IEEPA does not grant the President authority to impose tariffs in peacetime.
Chief Justice John Roberts clarified that the law contains no explicit reference to tariffs or duties. The ruling effectively removed the legal basis for the 18% tariff imposed on India.
Immediate Impact on India
With the new 10% universal tariff order, Indian exports to the US will now face a lower duty rate compared to the 18% previously announced. The temporary measure will remain in effect for 150 days unless extended by Congress.
However, exemptions remain for:
- Pharmaceuticals (under separate investigations)
- Goods covered under the US-Mexico-Canada Agreement
- Certain sector-specific tariffs such as steel and aluminium
Status of the India-US Trade Deal
Despite the court’s decision, Trump stated that trade negotiations with India remain intact.
“The India deal is on… nothing changes,” Trump said at the White House.
Earlier, the US and India had agreed on a framework for an interim trade arrangement, reducing punitive tariffs linked to India’s purchase of Russian oil. The new 10% duty effectively replaces the 18% rate that was part of that interim framework.
Market & Business Reaction
Financial markets responded positively, with Wall Street registering modest gains. Business groups welcomed the decision, citing improved certainty in trade policy.
However, questions remain over whether companies will receive refunds for tariffs already paid. While the administration previously indicated refunds might be issued if tariffs were deemed unlawful, the Supreme Court ruling did not clarify the mechanism.
The Penn Wharton Budget Model estimates potential refunds could total up to $175 billion.
Source: NDTV, White House Statement, US Supreme Court Ruling Documents
Leave a Reply