US Court Ruling Creates Confusion Over Trump Tariffs on Indian Exports

A recent US Supreme Court ruling striking down sweeping tariffs imposed by President Donald Trump has created confusion over the duty Indian goods will face when entering the American market. The decision has triggered uncertainty among exporters and policymakers, as multiple tariff figures — 18%, 10%, and 13.5% — have emerged in the wake of the legal development.

Until recently, India was expected to face an 18% tariff under an interim trade understanding negotiated earlier this month. The proposed arrangement reduced reciprocal duties from 25% to 18% and removed an additional 25% penalty linked to India’s purchase of Russian oil. The agreement is expected to be formalised in mid-March.

However, the Supreme Court ruled that the administration could not impose tariffs in peacetime under the International Emergency Economic Powers Act (IEEPA), a decades-old law cited to justify the sweeping duties. The decision effectively removed the legal foundation for the proposed 18% tariff structure.

New tariff order introduces fresh rate

Following the ruling, Trump signed a new order imposing a universal 10% tariff on imports from all countries, including India. The order was issued under Section 122 of US trade law, a rarely used provision that allows the president to impose tariffs of up to 15% for 150 days without immediate congressional approval. The new duty is scheduled to take effect on February 24.

While Trump publicly stated that the 18% tariff agreed in negotiations would remain intact, the White House later clarified that, from a legal standpoint, the applicable tariff for now is 10%.

What tariff will India effectively pay?

Before the tariff changes, India paid approximately 3.5% under Most Favoured Nation (MFN) rates. With the new 10% duty imposed under Section 122, the effective tariff burden currently stands at about 13.5%.

Trade experts note that the situation remains fluid. The administration is reportedly exploring alternative legal pathways to reinstate the negotiated 18% rate. Any long-term tariff framework may require congressional approval and further bilateral negotiations.

Impact on exporters and trade relations

The shifting tariff structure presents challenges for Indian exporters, who must adjust pricing strategies and supply chain decisions amid policy uncertainty. Sectors such as textiles, pharmaceuticals, engineering goods, and auto components could face cost pressures depending on the final tariff regime.

An Indian government delegation is expected to visit Washington DC soon to seek clarity and safeguard trade interests. Officials aim to ensure stability in tariff arrangements and protect export competitiveness.

The developments highlight the complexity of global trade policy and the legal limits surrounding executive authority in tariff decisions. Analysts say the evolving situation underscores the importance of bilateral dialogue and legal clarity in maintaining stable trade relations.

For now, Indian exporters are preparing for the 10% tariff while closely monitoring negotiations that could determine whether the previously discussed 18% rate is reinstated.