New Delhi : Uncertanity has occured on the duty Indian exports will now incur after the US Supreme Court struck down the sweeping global tariffs imposed by Donald Trump. Exporters must once again adjust to a shifting target, just days after Trump reduced tariffs to 18% from 50% as part of a trade deal that is yet to be signed. The major question is, will India have to pay a tariff of 18%, 10%, or 13.5% (adding the pre-liberation day duty of 3.5%)? Stay with us, and we will clear the confusion.
Under the agreement, which is expected to be signed mid-March, the reciprocal tariff was cut from 25% to 18%. The additional 25% tariff that Trump imposed on India for purchasing Russian oil was done away with after the US President claimed New Delhi would stop its energy trade with Moscow. On Friday, the US Supreme Court ruled that Trump could not impose tariffs in peacetime using the five-decade old International Emergency Economic Powers Act (IEEPA). This effectively removes the legal basis for the 18% reciprocal tariff imposed on India.
A fuming Trump moved quickly. By Saturday, the mercurial US President signed an order mandating a new 10% tariff on imports from all countries, including India, to replace the ones struck down by the Supreme Court. White House later clarified that, legally, India would be charged 10% tariff for now. All countries with trade agreements with the US now drop to a 10% tariff rate temporarily, a White House official said. Technically, the effective tariff for India should now stand at 3.5% plus the 10% imposed under Section 122 by Trump, taking the total levy to 13.5%.
An Indian government delegation is expected to visit Washington DC next week to seek clarity on the issue. The lower tariff rate will come as a welcome relief for Indian exporters, especially those in labour-intensive sectors like textiles and gems. At least for the next 150 days. The US is the largest market for Indian goods. The US said the Trump administration was currently looking for new legal avenues to reinstate the 18% rate they originally negotiated with India.
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