Explained: India’s New US Tariff After Supreme Court Verdict

After the US Supreme Court struck down US President’s biggest and boldest tariffs, confusion prevailed on the duty Indian exporters will have to incur. Just within days of the US tariffs being reduced from a staggering 50% to 18%, as part of a interim trade deal yet to be signed by US and India, the verdict has unleashed chaos among the export companies over the new tariff.

After the apex court struck down the sweeping tariffs and termed them illegal, Trump imposed a new 10% global tariff.

For some time after this, exporters were confused over the tariffs that need to paid to the US. Is it 18% or 10% or 13.5%? The 13.5% tariff combines 10% announced by Trump after court ruling and the pre-liberation day duty of 3.5%).

As part of the interim trade deal yet to be signed, the US administration imposed a tariff of 18%, cut down from the 25%. An additional 25% tariff was also imposed on India for purchasing Russian crude as a punitive measure.

However, with the court ruling that Trump cannot impose tariffs basing on the International Emergency Economic Powers Act (IEEOA), the 18% tax on India would get eliminated. This would have left India to pay only 3.5% tariff like in the past before Trump imposing reciprocal tariff, when India enjoyed the Most Favoured Nation status.

But, Trump soon understood the repercussions of the court verdict and made an announcement mandating a new 10% tariff on imports from all countries across the world, including India. 

Trump invoked Section 122 to impose the 10% tariffs, a law that empowers US Presidents to impose tariffs up to 15% for 150 days. The new tariff will become effective from February 24.

However, after some time since the confusion creeped in, the White House made it clear that India would be charged 10% tariff for now. Technically, this would put the total tariff to be paid by India at 10% plus 3.5%, which totals to 13.5%. However, the White House has to confirm the number.

Terming the tariffs imposed by Trump as illegal, the court said that Trump exceeded his authority by imposing the sweeping tariffs. Trump pursued tariffs basing on a law that was meant to be used during national emergencies, the court said.