Under the leadership of Donald Trump, tariffs on Indian goods moved from 26% to a staggering 50%, before being brought down to a flat 10% following a landmark ruling by the Supreme Court of the United States.
The dramatic swings were not merely policy tweaks. They disrupted export contracts, rattled markets, and altered trade calculations for thousands of Indian businesses that relied on the US market.
The First Jolt: 26% Tariff Announcement
The turbulence began on April 2, 2025, when the Trump administration imposed a 26% tariff on imports from India.
What made up the 26%?
- 10% baseline duty
- 16% reciprocal tariff
Washington described the move as a corrective measure against what it viewed as trade imbalances and unfair market practices. For Indian exporters, it felt like a sudden tax on competitiveness.
Engineering goods, textiles, auto components, and specialty chemicals were among the sectors closely watching the development. Contracts had to be renegotiated. Margins were squeezed almost overnight.
Just days later, on April 9, the US suspended the 16% reciprocal component, bringing the effective rate back to 10%. The rollback signalled room for negotiation but did little to restore long-term confidence.
Escalation: How Tariff Reached 50%
If April was unsettling, July and August were bruising.
On July 31, 2025, a fresh 25% tariff was imposed. The situation escalated further in August when an additional 25% penalty was introduced, linked to India’s continued purchase of Russian oil.
The build-up to 50%
- 25% tariff announced in late July
- Additional 25% penalty in August
- Effective burden touched 50% on several product categories
A 50% tariff is not a marginal increase. It is a near barrier.
Exporters reported delayed shipments and price renegotiations. Some US buyers began exploring alternative sourcing destinations. Industry associations warned that prolonged continuation could result in structural loss of market share.
The penalties also had geopolitical undertones. While India maintained that its energy purchases were driven by national interest and economic pragmatism, Washington framed the action as part of a broader strategic posture.
The Legal Earthquake: Supreme Court Intervention
The most unexpected twist came in February 2026.
In a 6 to 3 decision, the Supreme Court of the United States ruled that tariff imposed under emergency powers lacked legal validity. The judgment effectively dismantled the higher duty framework introduced by the Trump administration.
For India, the ruling meant immediate relief on a significant portion of exports that had been subjected to elevated rates.
However, the story did not end there.
Within days, President Trump invoked Section 122 of the Trade Act of 1974 to impose a flat 10% tariff on most global imports, including Indian goods. The new rate came into effect on February 24, 2026.
Back to 10% Tariff: Relief, But Not Certainty
The return to a 10% tariff marked a sharp correction from the 50% peak. For exporters, this was a meaningful reprieve.
What 10% changes
- Restores price competitiveness in the US market
- Revives stalled negotiations and pending shipments
- Reduces immediate pressure on export margins
Yet the relief is layered with caution.
The 10% levy rests on a different legal basis and may still face scrutiny. In addition, existing Most Favoured Nation duties could affect the final effective rate for certain goods.
Trade experts point out that the real issue is no longer the number alone. It is predictability. Businesses can factor in a 10% duty if they know it will remain stable. What they struggle with is volatility that swings from 26% to 50% and then down to 10% within months.
The Larger Trade Picture
The tariff episode highlights how deeply global trade is intertwined with politics and legal frameworks.
For India, three lessons stand out:
- Overdependence on any single export market increases vulnerability
- Geopolitical positioning has direct economic consequences
- Legal institutions can dramatically reshape trade policy outcomes
Despite recent relief, uncertainty remains. Negotiations between New Delhi and Washington are expected to continue, with both sides exploring a more structured trade framework.
For now, exporters are recalibrating rather than celebrating. The move from 50% to 10% has eased immediate pressure, but confidence will return only when policy steadiness replaces tariff whiplash.
In international trade, it is not just the rate that matters. It is the reliability behind it.
