Since the US Supreme Court struck down President Donald Trump’s tariffs on Friday, there has been some confusion about how much India has to pay to Washington.
India and the United States are close to finalizing the text of an interim trade agreement, and have already announced an 18% tariff on Indian goods earlier this month, down from 50% previously. But the US Supreme Court ruling has everyone wondering whether the tariffs are over now.
Angry Donald Trump India quickly moved to sign an order imposing a new 10 percent tariff on imports from all countries, including India, to replace those struck down by the Supreme Court.
He cited a never-used law, Section 122 of the Trade Act of 1974. It gives US presidents the power to impose tariffs of up to 15 percent for 150 days to address a trade imbalance with any country, after which they would need congressional approval. The 10% tariff will take effect on February 24.
What customs duties does India have to pay?
When Donald Trump was asked to clarify the tariff rate on India, he said that it would remain at 18 per cent, as agreed earlier. However, the White House later clarified that for now, India will be slapped with 10% tariffs.
A White House official said: “All countries that have concluded trade agreements with the United States are now reduced to a 10 percent tariff rate temporarily.”
According to the US Supreme Court, the Trump administration cannot impose tariffs in peacetime under the five-decade-old International Emergency Economic Powers Act. This effectively removes the legal basis for the 18 per cent reciprocal tariff imposed on India.
So, the effective tariff for India should now be 3.5% (the tax imposed before Trump’s Emancipation Day tariffs) plus the 10% imposed under Section 122 of the Trade Act of 1974, bringing the total to 13.5%. However, there has been no clarity on this matter from the White House yet.
However, there is no clarity yet on Trump’s new 10 percent reciprocal tariff after the 150-day period.
It’s also worth noting that according to a White House fact sheet, Section 232 tariffs of 50% on steel and aluminum, and 25% on some auto parts, will remain in place.
An Indian government delegation is expected to visit Washington, DC, next week to seek clarification on the issue.
While the Trump administration may currently be looking for legal ways to reimpose the 18% tariff on India, the Supreme Court ruling gives New Delhi some room for bargaining.
How did India respond?
In his first response to the US Supreme Court’s order canceling the reciprocal tariffs imposed, Union Minister Pralhad Joshi said The Center will study the ruling and the Commerce Ministry or the Foreign Ministry will respond to it formally, he said on Saturday.
“I have read in the media that the US Supreme Court has issued some rulings and the Indian government will look into that, and whatever reaction should be given, will be given by the commerce ministry and MEA, not by me,” Joshi was quoted as saying by news agency ANI.
An official response is awaited from India on this issue.
