The latest shift in US trade policy has once again altered the landscape for global exporters. After the US Supreme Court struck down sweeping tariffs imposed under the International Emergency Economic Powers Act (IEEPA), President Donald Trump moved swiftly to introduce a fresh framework, invoking Section 122 of the Trade Act of 1974.
The White House has imposed a temporary 10 per cent ad valorem import duty effective February 24, 2026, for 150 days. Shortly thereafter, the tariff was raised to 15 per cent. The development has prompted a recalibration of trade expectations across Asia, including in India.
So, does this tariff reset place India in a relatively stronger position? And how could it influence the proposed US-India trade agreement and the broader Indian economy?
The Supreme Court Ruling And The Policy Pivot
On February 20, the US Supreme Court delivered a 6-3 judgment invalidating the Trump administration’s earlier tariffs imposed under IEEPA. The Court held that a law intended for genuine national emergencies could not be used to impose sweeping structural trade restrictions. The ruling reaffirmed that the authority to levy tariffs rests primarily with Congress.
As a result, the earlier 10 per cent universal tariff, country-specific reciprocal duties and certain emergency-linked measures were struck down. However, tariffs under Section 232 (national security) and Section 301 (unfair trade practices) remain unaffected.
The administration’s use of Section 122 ensures that US import costs will remain elevated in the near term, even as the broader reciprocal tariff framework has been invalidated.
Is India Placed Better Than Others?
According to analysts at Emkay Global, as reported by Moneycontrol, about 55 per cent of India’s exports to the US will now face a 15 per cent tariff. Nearly 40 per cent, including electronics, pharmaceuticals and petroleum products, remain exempt.
This translates into an effective tariff rate of around 11-13 per cent for India. By comparison, China’s effective rate is estimated to be above 15 per cent.
Emkay analysts observed, “We think the deal will be renegotiated to make it more balanced, and India is now under less pressure to make large trade concessions.”
Most Asian economies are expected to face broadly similar tariff levels. For export competitors such as Bangladesh and Vietnam, the revised regime could narrow competitive gaps over the next 150 days, a period that policymakers and exporters will track closely.
In relative terms, India appears better placed than under the earlier interim reciprocal tariff structure, which had exposed certain sectors to sharply elevated duties.
What It Means For Indian Exporters
An analysis by Rubix Data Sciences revealed that before the Supreme Court ruling, Indian exports faced cumulative tariff exposure of up to 50 per cent in some sectors, with reciprocal tariffs set at 18 per cent under interim arrangements.
With reciprocal tariffs invalidated, a substantial portion of India’s exports would have reverted to standard Most Favoured Nation (MFN) rates. However, the newly imposed temporary 10 per cent, later 15 per cent duty reintroduces a baseline cost increase across a wide range of imports.
In effect, Indian exporters gain relief from elevated reciprocal tariffs but continue to face moderate cost pressures during the 150-day temporary period.
Importantly, India’s export performance has remained relatively resilient. Rubix estimates that exports to the US stood at $25.5 billion during September-December 2025, compared with $25.8 billion during the same period in 2024.
Nirmala Sitharaman: ‘Too Early To Comment’
Finance Minister Nirmala Sitharaman has urged caution in assessing the economic fallout. According to PTI, she said it was “a bit too soon to comment” on the impact of the tariff changes on the Indian economy.
Speaking to reporters after addressing the RBI’s Central Board, Sitharaman on Monday noted that while the broader economic implications require time to assess, the commerce ministry is reviewing the situation, particularly from a trade perspective. She indicated that further negotiations would depend on the delegation’s assessment of the evolving landscape.
She said India remains committed to pursuing trade agreements and has already signed pacts with Australia, New Zealand, the UAE, Qatar, Oman, the EU and the UK. She added that India wants the economy to benefit from global trade access and expanded market reach.
Meanwhile, citing sources, PTI reported that India and the US have rescheduled a proposed meeting of their chief negotiators in Washington to finalise the text of an interim trade pact. Joint Secretary in the Commerce Ministry, Darpan Jain, is India’s chief negotiator for the agreement.
What Does This Mean For The US-India Trade Deal?
The Supreme Court ruling reshapes the context in which trade negotiations are taking place. According to Rubix Data Sciences, the decision introduces greater structural predictability by reinforcing Congressional oversight of tariff authority.
Although the temporary 10-15 per cent duty remains a bargaining tool, its statutory basis and 150-day limit provide clearer boundaries than the earlier emergency-based tariff regime.
For India, this enhances policy visibility. Exporters and negotiators can operate within a more legally defined framework, even as short-term tariff pressures persist.
The next five months will therefore be critical. The Section 122 tariffs have a 150-day limit, after which the direction of US trade policy, and the shape of any interim trade agreement, will become clearer.
Risk Remains For India
The tariff reset creates a more favourable, though not risk-free, environment for India.
Key takeaways include:
- Improved relative competitiveness compared with China under the revised tariff matrix.
- Removal of elevated reciprocal tariffs, easing sector-specific pressure.
- Continued near-term cost pressures due to the temporary 10-15 per cent duty.
- Potential liquidity gains from tariff refunds, subject to administrative implementation.
- Greater legal clarity and predictability in the US tariff authority.
Protectionist impulses have not disappeared. However, they are now more structured, time-bound and legally grounded, the analysts noted.
Export competitiveness improves relative to the previous escalation cycle, but the coming months will determine whether the reset translates into a more balanced and durable US-India trade framework.
