Trump tariffs: More uncertainty as government, industry on wait and watch mode
For India, tariff burden on large part of exports down to 10% plus MFN rate, 40% of exports remain exempt
- Feb 21, 2026,
- Updated Feb 21, 2026 12:34 PM IST
It’s a wait-and-watch mode for both the government and industry as they look for greater clarity on what happens to the US administration’s reciprocal tariffs following the Supreme Court ruling. For now, India’s discussions with the US on the bilateral trade agreement are continuing but the analysis of the new tariffs is also underway, and there’s much uncertainty not only in India but also globally on the trade order. Soon after the US Supreme Court struck down the reciprocal tariffs, US President Donald Trump announced that a global tariff of 10% would be levied on all countries. According to a White House Proclamation signed by Trump, the US has imposed for a period of 150 days, a temporary import surcharge of 10% ad valorem, on articles imported into the United States, effective February 24, 2026. Specified products including certain critical minerals, electronics, pharmaceuticals, aerospace products, passenger vehicles and agriculture products have been excluded from the tariffs. A report by the Global Trade Research Initiative said that the removal of the reciprocal tariffs will free about 55% of India’s exports to the United States from the 25% duty (including the 18% rate yet to be implemented under the interim framework announced in the February 6 joint statement), leaving these exports subject only to standard most favoured nation tariffs. On the remaining exports, Section 232 tariffs will continue — 50% on steel and aluminium and 25% on certain auto components — while products accounting for roughly 40% of export value, including smartphones, petroleum products and medicines, will remain exempt from US tariffs. “The ruling should prompt India to re-examine its trade deal with the United States. After offering concessions — including reducing MFN tariffs, aligning economic policies with US interests, easing regulations affecting U.S. goods, and signaling large purchases of U.S. products — India was to receive an 18% reciprocal tariff rate. Now, even without a trade deal, India, like other countries, faces a 10% tariff on most goods, rendering the agreement being negotiated useless,” said the report by GTRI Founder Ajay Srivastava. Exporters in India, who were feeling relieved after the announcement of the conclusion of the first tranche under the bilateral trade agreement, are also going back to the drawing board. But the 10% tariff is expected to provide much relief for now, given that the US had removed the 25% penalty tariff and Executive Order was being awaited for the reduction of the tariff to 18%. Significantly, the development comes just ahead of meetings of an Indian delegation to the US to finalise the legal text of the interim trade agreement with the US. A team led by India’s chief negotiator Darpan Jain is scheduled to hold three-day meetings in Washington DC with their US counterparts from February 23 to finalise the legal text for the trade deal. The Confederation of Indian Textile Industry (CITI) said it is analysing the implications of the latest developments on the US tariffs front and how it may affect India's textile and apparel exports. “Without a doubt, the developments of February 20, 2026, have cast a fresh spell of uncertainty. Authorities providing greater clarity, including on what now happens to the terms agreed in the interim trade deal between India and the US, will be most helpful. This is particularly important since the US is the single-largest market for India's textile and apparel exports,” said CITI Chairman Ashwin Chandran. Manoj Mishra, Partner and Tax Controversy Management Leader, Grant Thornton Bharat said that the US Supreme Court ruling has given much-needed relief and a competitive boost to Indian exporters, while also paving the way for potential refunds of tariffs collected without adequate legal basis. “However, the US is expected to continue relying on sector-specific tariffs under Section 232 in strategic sectors, underscoring the importance of advancing the bilateral trade agreement to secure durable tariff certainty and stable market access for Indian exporters,” he said. Michael Pearce, Chief US Economist at Oxford Economics noted that even if the administration is able to replicate the overall level of tariffs using other means, the by-sector and by-country implications could end up looking very different, which will create another bout of trade policy uncertainty for business, investors, and households. “This uncertainty is a key downside risk that could ding, rather than derail, growth this year,” he said.
It’s a wait-and-watch mode for both the government and industry as they look for greater clarity on what happens to the US administration’s reciprocal tariffs following the Supreme Court ruling. For now, India’s discussions with the US on the bilateral trade agreement are continuing but the analysis of the new tariffs is also underway, and there’s much uncertainty not only in India but also globally on the trade order. Soon after the US Supreme Court struck down the reciprocal tariffs, US President Donald Trump announced that a global tariff of 10% would be levied on all countries. According to a White House Proclamation signed by Trump, the US has imposed for a period of 150 days, a temporary import surcharge of 10% ad valorem, on articles imported into the United States, effective February 24, 2026. Specified products including certain critical minerals, electronics, pharmaceuticals, aerospace products, passenger vehicles and agriculture products have been excluded from the tariffs. A report by the Global Trade Research Initiative said that the removal of the reciprocal tariffs will free about 55% of India’s exports to the United States from the 25% duty (including the 18% rate yet to be implemented under the interim framework announced in the February 6 joint statement), leaving these exports subject only to standard most favoured nation tariffs. On the remaining exports, Section 232 tariffs will continue — 50% on steel and aluminium and 25% on certain auto components — while products accounting for roughly 40% of export value, including smartphones, petroleum products and medicines, will remain exempt from US tariffs. “The ruling should prompt India to re-examine its trade deal with the United States. After offering concessions — including reducing MFN tariffs, aligning economic policies with US interests, easing regulations affecting U.S. goods, and signaling large purchases of U.S. products — India was to receive an 18% reciprocal tariff rate. Now, even without a trade deal, India, like other countries, faces a 10% tariff on most goods, rendering the agreement being negotiated useless,” said the report by GTRI Founder Ajay Srivastava. Exporters in India, who were feeling relieved after the announcement of the conclusion of the first tranche under the bilateral trade agreement, are also going back to the drawing board. But the 10% tariff is expected to provide much relief for now, given that the US had removed the 25% penalty tariff and Executive Order was being awaited for the reduction of the tariff to 18%. Significantly, the development comes just ahead of meetings of an Indian delegation to the US to finalise the legal text of the interim trade agreement with the US. A team led by India’s chief negotiator Darpan Jain is scheduled to hold three-day meetings in Washington DC with their US counterparts from February 23 to finalise the legal text for the trade deal. The Confederation of Indian Textile Industry (CITI) said it is analysing the implications of the latest developments on the US tariffs front and how it may affect India's textile and apparel exports. “Without a doubt, the developments of February 20, 2026, have cast a fresh spell of uncertainty. Authorities providing greater clarity, including on what now happens to the terms agreed in the interim trade deal between India and the US, will be most helpful. This is particularly important since the US is the single-largest market for India's textile and apparel exports,” said CITI Chairman Ashwin Chandran. Manoj Mishra, Partner and Tax Controversy Management Leader, Grant Thornton Bharat said that the US Supreme Court ruling has given much-needed relief and a competitive boost to Indian exporters, while also paving the way for potential refunds of tariffs collected without adequate legal basis. “However, the US is expected to continue relying on sector-specific tariffs under Section 232 in strategic sectors, underscoring the importance of advancing the bilateral trade agreement to secure durable tariff certainty and stable market access for Indian exporters,” he said. Michael Pearce, Chief US Economist at Oxford Economics noted that even if the administration is able to replicate the overall level of tariffs using other means, the by-sector and by-country implications could end up looking very different, which will create another bout of trade policy uncertainty for business, investors, and households. “This uncertainty is a key downside risk that could ding, rather than derail, growth this year,” he said.