Washington: On Friday, a 10% tariff imposed on most cargo ships from India to the US since February is set to expire. This is what it always meant. The measure was temporary by statute, a stop-gap reform enacted after the U.S. Supreme Court struck down the legal basis of Donald Trump’s original tariff regime.
Expiry is not India alone. The same 10% applies to most of America’s trading partners, and they are waiting for the same answer. In India’s case, Washington has two investigations open against it that could produce replacement tariffs. An interim trade agreement that would resolve the question is close but unsigned. And a bill about to pass through the US Senate would authorize a levy of up to 100% on Indian goods on an entirely different matter – the country’s purchases of Russian oil.
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How much do Indian exporters pay today
Indian goods entering the United States are currently subject to a 10% tariff under Section 122 of the Trade Act of 1974, which allows the President to impose temporary tariffs to correct a fundamental balance of payments problem. It is paid on top of the most favored nation rates paid by each US trading partner, which vary by product.
Two categories perform heavy duty. Under Section 232 of the Trade Expansion Act of 1962, the tariff is 50% on steel, aluminum and core metal goods and 25% on automobiles and auto parts. None of these are affected by Friday’s closing.
But there are some who escape the additional tariffs altogether.
The exemptions, established under Executive Order 14257 and expanded by White House clarification in April 2025, include electronics — smartphones, laptops, data processing machines, semiconductor devices and integrated circuits — as well as pharmaceuticals, energy products and critical minerals. These are among the largest export lines of India. Smartphones alone were valued at $10.9 billion and pharmaceuticals at $9.8 billion in 2024-25, while total merchandise exports to the US that year stood at $86.51 billion. At that time, exempt categories accounted for almost half of everything India sold in the US market.
Trump said on Tuesday Generic drugs will continue to enter at zero tariffs for two years from August 1, before increasing to 100% for one year and 200% after that, a social media post said, adding that it imposed penalties on manufacturers who refuse to increase production in the US.
The courts canceled the deal
India and the US reached a framework agreement on February 7, reducing tariffs on Indian goods from 50% to 18%, while also removing a 25% penalty imposed on India’s Russian oil purchases. In return, New Delhi signaled its intention to buy $500 billion of US goods – the commitment was non-specific, as well as the period over which it would be fulfilled – and signaled further opening of its market to US exports, including limited agricultural products.
Commerce Minister Piyush Goyal has been clear about why India accepted those terms: At 18%, Indian exporters will have an advantage over competitors like China, Indonesia, Vietnam, Bangladesh and Sri Lanka. He returned to the issue after the latest round of talks and this remains the pivot on which New Delhi’s position changes.
A major legal basis for that framework remained in place for a short time. On February 20, the US Supreme Court struck down Trump’s use of emergency economic powers to impose tariffs, removing the 18% rate for India and higher levies for its rivals. The framework anticipated something similar. Its text provides that “in the event of any change in the agreed tariffs of either country, the United States and India agree that the other country may modify its commitments” – New Delhi has since relied on this clause.
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Replacement of Washington, this will cause problems for India
The administration’s answer is Section 301 of the same 1974 statute, which allows the US to retaliate against trading partners found to be engaging in unfair or discriminatory practices. Unlike Section 122 there is no rate limit and no expiry date, but it does require a formal investigation first.
There are two openings against India. One examines the use of forced labor in Indian products, and in early June, Washington proposed an additional 12.5% tariff on that basis. India rejected this conclusion. Second, additional manufacturing capacity, is still pending.
This is where the tariff math gets complicated: Pakistan, Sri Lanka and the Philippines are the only countries subject to forced-labor scrutiny.
If both Indian cases generate tariffs, the gains the February framework was designed to secure could be in jeopardy.
“I think both sides are very close to agreement on the substance of the interim agreement, but they may balk at India’s insistence that it first get clarity that it will get preferential tariffs compared to other countries,” said Mark Linscott, senior adviser to the Asia Group and former assistant US trade representative for South and Central Asia, who handled negotiations with India in that role. “Some of them, such as Pakistan, Sri Lanka and the Philippines, are not subject to excess capacity 301, so it is difficult to see how they could have a higher overall tariff than India, at least until new 301 cases start to arise involving them.”
indexing question
Whether the Section 301 tariffs come before Friday, after, or with the measure expiring remains uncertain.
“It’s difficult to tell. I expect the 301 tariff for forced labor will be implemented by July 24, but there may be a slight delay. We will know by the end of next week and even in the next few days,” Linscott said. “I doubt Congress will make any serious effort to seek an extension, especially once the 301 tariffs go into effect.”
The extension would require congressional approval, which would mean asking lawmakers to increase tariffs that U.S. courts have already ruled illegal. The Court of International Trade found that the proclamation implementing Section 122 never emphasized the balance of payments problem as required by law. Its ruling only covered the companies that had filed the case, meaning the ruling didn’t take down the entire base, but it still puts it in an untenable position.
Two recent examples indicate that the Trump administration is considering different options. Brazil emerged from the concluded Section 301 investigation with 25% tariffs. Canada affected this week A 50% tariff on selected goods will take effect next month under Section 338 of the Tariff Act of 1930 — a dormant provision that allows the President to punish discriminatory behavior of American commerce, implemented without investigation and outside the terms of existing trade agreements.
Other tariffs, and the Russian oil trap
An even more serious threat is legislative. A bill introduced in the US Senate would impose tariffs of up to 100% on the five biggest buyers of Russian oil and natural gas, aimed at preventing the revenues financing Moscow’s war in Ukraine. Its sponsors clearly named India among the five. They want it to be passed by the end of July. It has presidential discretion, and faces resistance in the House of Representatives from members reluctant to cede more tariff authority to the administration.
Importantly, Washington had already allowed these purchases through a temporary waiver, thereby contributing to its own actions in alleviating the energy crisis in West Asia when the Strait of Hormuz was blocked. That exemption has since expired.
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after friday
Four results are live. Given the administration’s clear intention to maintain leverage, it is unlikely that Indian goods could return to most-favoured nation rates alone without any additional tariffs.
10% can be increased, which is needed by Congress. The Section 301 tariff could replace it, the rate at which testing has not yet been determined. Or Washington could reach for a different tool entirely, as it has just done with Canada.
Linscott hopes for a third.
“Until the interim agreement is concluded and signed, I don’t think we’ll see 18% tariffs. We could have a period of very high tariffs, including 12.5% on forced labor and additional tariffs for excess capacity. I wouldn’t be surprised to see it at 30% or higher,” he said. “This shows that there is a need for some urgency to conclude the interim agreement.”
Which returns the matter to the negotiating table, where it has been sitting since February – with one narrow deadline missed.
