How the US Supreme Court verdict changes tariffs on India | Onmanorama Explains

India is set to face a lower reciprocal tariff of 10 per cent, down from 25 per cent, after US President Donald Trump announced a temporary global levy on imports following a Supreme Court ruling that struck down his sweeping duties on multiple countries.

A proclamation dated February 20 was issued by the White House, outlining the new tariff framework.

Here are the key points explaining what the development means for Indian businesses.

What is a tariff?
A tariff is a customs or import duty imposed by a country on goods purchased from abroad. The importer pays the duty to the government, though companies often pass on the added cost to consumers.

Such duties typically make imported goods more expensive in the destination market, though other economic factors also influence final prices.

What are reciprocal tariffs?
The concept of reciprocal tariffs was first introduced by the US. On April 2, 2025, the Trump administration imposed these duties on about 60 countries, including India, with the stated aim of creating a level playing field for American exporters.

Under this system, if a country levies a certain percentage of duty on US goods, Washington applies a similar rate on imports from that country. These are additional duties, imposed over and above existing Most Favoured Nation (MFN) tariffs.

Reciprocal tariffs on India
On April 2, 2025, the US announced a 26 per cent reciprocal tariff on India. In July, the rate was revised to 25 per cent on Indian goods entering the US from August 7, 2025.

Separately, the Trump administration last August imposed an additional 25 per cent tariff on India over its purchases of Russian crude oil, pushing the total reciprocal tariff burden to 50 per cent.

After both sides agreed on a framework for an interim trade deal in February, Washington said it would reduce the reciprocal tariff on India to 18 per cent and withdraw the additional 25 per cent punitive duty. However, at the time, Indian exports continued to face a 25 per cent reciprocal tariff.

Following the Supreme Court’s decision to strike down President Trump’s global tariff measures, Washington introduced a uniform 10 per cent temporary import surcharge. As a result, from February 24, 2026, Indian goods will face a 10 per cent reciprocal levy instead of 25 per cent.

For example, if a product attracts a 5 per cent MFN duty in the US, an additional 10 per cent will now apply, taking the total effective duty to 15 per cent. Earlier, this would have been 5 per cent plus 25 per cent.

Trump's proclamation, dated February 20, said: "I impose, for a period of 150 days, a temporary import surcharge of 10 per cent ad valorem on articles imported into the United States, effective February 24, 2026" at 12:01 a.m. Eastern Standard Time.

"Instead of different RTs on different countries, it is 10 per cent now on everyone for the goods which were covered under RTs," a source said.

Between February 7 and February 24, 2026, the Russia-oil penalty was removed, reducing the additional duty to 25 per cent. A joint statement issued on February 6 had proposed cutting the reciprocal tariff to 18 per cent, though that revision has yet to take effect. From February 24, 2026, the temporary 10 per cent levy will apply for 150 days, replacing the earlier country-specific reciprocal tariff structure.

India-US trade pact
To finalise the legal text of the first phase of the bilateral trade agreement, an Indian delegation is scheduled to meet US officials in Washington from February 23, 2026.

Commerce and Industry Minister Piyush Goyal on February 20 said India and the US are likely to sign the deal next month, with implementation expected in April.

Expert view
Think tank GTRI said the reduction in reciprocal tariffs to 10 per cent from 25 per cent warrants a reassessment of India’s approach to the trade pact.

India had agreed to lower tariffs for US goods based on Washington’s earlier move to cut the reciprocal tariff on India to 18 per cent. However, with the US now reducing tariffs to 10 per cent for all countries, the calculus has changed.

"Deals are not charity. Both sides must gain. Now, India's gains need fresh evaluation," GTRI founder Ajay Srivastava said.

Trump’s stance on India deal
President Trump said the Supreme Court verdict does not alter the proposed trade agreement with India. He maintained that the deal remains unaffected even as he responded to the ruling by announcing an additional 10 per cent global levy on imports.

Exempted goods
A White House fact sheet said certain goods will be exempt from the temporary import surcharge to safeguard US economic interests and address international payments concerns, reported PTI.

These include selected critical minerals; metals used in currency and bullion; energy and related products; natural resources and fertilisers not produced domestically in sufficient quantities; certain agricultural products such as beef, tomatoes and oranges; pharmaceuticals and related ingredients.

Also exempted are specific electronics; passenger vehicles, light trucks, medium and heavy-duty vehicles, buses and select auto parts; as well as certain aerospace products.

Sector-specific tariffs
Existing sectoral tariffs will remain in force. These include 50 per cent duties on steel, aluminium and copper, and 25 per cent tariffs on certain auto components.

Why the US imposed tariffs
Washington has argued that it runs a significant trade deficit with India and has accused New Delhi of maintaining high tariffs on American products, which it says restrict US exports.

Bilateral trade snapshot
Between 2021 and 2025, the US was India’s largest goods trading partner. The US accounts for about 18 per cent of India’s total exports, 6.22 per cent of imports and 10.73 per cent of overall bilateral trade.

In 2024-25, bilateral trade reached USD 186 billion, comprising USD 86.5 billion in exports and USD 45.3 billion in imports. India recorded a trade surplus of USD 41 billion with the US in 2024-25, compared with USD 35.32 billion in 2023-24 and USD 27.7 billion in 2022-23.

In services, India exported an estimated USD 28.7 billion and imported USD 25.5 billion, resulting in a USD 3.2 billion surplus. Overall, India posted a total trade surplus of about USD 44.4 billion with the US.

Key traded products
In 2024, India’s top exports to the US included drug formulations and biologicals (USD 8.1 billion), telecom instruments (USD 6.5 billion), precious and semi-precious stones (USD 5.3 billion), petroleum products (USD 4.1 billion), vehicle and auto components (USD 2.8 billion), gold and other precious metal jewellery (USD 3.2 billion), cotton ready-made garments including accessories (USD 2.8 billion), and iron and steel products (USD 2.7 billion).

Major imports from the US included crude oil (USD 4.5 billion), petroleum products (USD 3.6 billion), coal and coke (USD 3.4 billion), cut and polished diamonds (USD 2.6 billion), electric machinery (USD 1.4 billion), aircraft and spacecraft parts (USD 1.3 billion), and gold (USD 1.3 billion).

US services imports from India were estimated at USD 40.6 billion in calendar year 2024, led by computer and information services at USD 16.7 billion and business management and consulting services at USD 7.5 billion.