50%, 25%, 18%, 10% or 3%? What tariff applies to Indian goods today - breaking down the post-ruling reality

Tariff uncertainty lingers

• US resets tariffs on Indian goods to MFN rates near 3 percent
• A new 10 percent global tariff will soon apply to Indian exports
• Sector-specific tariffs on steel and autos remain unchanged

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The tariff regime governing Indian exports to the United States is expected to undergo another change, leaving exporters grappling with a moving target. After touching as high as 50 percent in August, the effective tariff on most Indian goods has now reverted to Most Favoured Nation (MFN) levels of around 3 percent following a US Supreme Court ruling. Though a temporary 10 percent global tariff is set to once again complicate the picture.

“The new global 10% tariff will come into place soon, within three days,” US President Donald Trump said on February 21.

For India, the US President indicated that the framework stands as of now.

“Nothing changes on Indian trade deal, we are not paying tariffs to India and India is paying tariffs to us. We did a little flip (from the earlier situation),” Trump noted.

The escalation began in April, when the US imposed 26 percent tariff on India, which was then reduced to 10 percent. Washington imposed a 50 percent tariff on Indian goods in August. That levy comprised a 25 percent reciprocal tariff and a further 25 percent ad valorem duty linked to India’s imports of Russian oil. The Russia-linked component was removed on February 6 through an executive order, bringing the effective tariff down to 25 percent.

“India has committed to stop directly or indirectly importing Russian Federation oil, has represented that it will purchase United States energy products from the United States, and has recently committed to a framework with the United States to expand defense cooperation over the next 10 years,” the February 6 executive order noted while eliminating the additional 25 percent duty.

Under a bilateral understanding announced earlier this month, tariffs were expected to decline further to 18 percent once a fresh executive order was issued and the first tranche of a trade agreement was concluded. That reduction, however, never fully materialised.

Instead, the US Supreme Court struck down the reciprocal tariffs imposed under emergency provisions, effectively resetting duties on Indian goods to MFN levels. Before the tariff escalation, average weighted duties on Indian exports stood at roughly 3 percent.

But the relief may not be absolute. In a briefing after the court decision, US President Donald Trump announced a 10 percent global tariff under Section 122 of the Trade Act of 1974, indicating it would remain in place for up to 150 days unless extended by Congress.

“I don’t need to ask Congress (on additional tariffs), if I would and I would probably get it,” Trump said, adding that investigations were underway to impose what he described as fair tariffs.

He also signalled that further investigations under Section 301 of the Trade Act of 1974 could lead to additional levies.

At present, China, Canada and Mexico face Section 301 tariffs, however, they have been able to secure exemptions on a large part of the trade.

For now, most Indian exports face baseline MFN duties of around 3 percent, layered with a temporary 10 percent global tariff once it kicks in after the executive order. The exemptions on mobile phones, pharma, which at present face nil tariffs under the reciprocal order, are likely to be retained under the new regime.

Sector-specific tariffs under separate national security provisions, such as Section 232 on steel and automobiles, remain in place.