New Delhi: The proposed 18% reciprocal tariff on Indian goods in the US market — announced earlier this month — may no longer be relevant after the US Supreme Court’s verdict, but both partners are committed to formalising a “mutually beneficial” interim trade deal in the spirit of the India-US joint statement while factoring in the changed material situation, people aware of the development said.
For India, the existing reciprocal tariff of 25% would come down to 15%, instead of 18% (as agreed upon in a February 7 joint statement), after the US Supreme Court struck down the legal basis for the higher levy. Trump on Saturday announced a 15% tariff on all trading partners, up from 10% that he imposed less than 24 hours earlier after the court setback. The 15% tariff rate will be on top of product-specific most-favoured nation (MFN) rates — the non-discriminatory tariffs charged by a country on imports from all WTO members, excluding nations with which it has preferential trade deals.
After the verdict, the 15% plus MFN rate is the new normal, the people said. A “mutually beneficial” agreement would “ideally” require Washington to either lower the 15% levy or MFN rates so that Indian goods remain competitive vis-à-vis China, Bangladesh, Vietnam, Cambodia and Indonesia, the people said, emphasising the “spirit” of the joint statement.
“Tariff commitments may have to be realigned with the changed situation as the joint statement specifically provides for such adjustments,” one of them said. The joint statement issued by the US on February 6 says: “In the event of any changes to the agreed upon tariffs of either country, the United States and India agree that the other country may modify its commitments.”
The ministries of commerce and external affairs did not respond to HT’s specific email queries. The commerce ministry, however, issued a statement on Saturday evening: “We have noted the US Supreme Court judgement on tariffs yesterday. President Trump has also addressed a press conference in that regard. Some steps have been announced by the US Administration. We are studying all these developments for their implications.”
To be sure, India and the US were yet to finalise the legal text for the interim bilateral trade agreement (BTA) on the basis of an agreed framework laid out by the joint statement. An Indian team led by chief negotiator Darpan Jain was scheduled to reach in Washington on February 23 for three days of talks to finalise the text ahead of an expected visit by US Trade Representative (USTR) Jamieson Greer in March to sign the agreement. Any change in these meetings could not be immediately ascertained.
While industry is worried about continued uncertainties in India’s biggest merchandise export market, experts expect more clarity by early next week. US treasury secretary Scott Bessent, however, indicated the administration is exploring multiple avenues to sustain its tariff actions.
In a post on X, Bessent said: “President Trump will always put America’s national security and Americans first. And as I have said before, the President has multiple tools in his toolbox. Let’s be clear: the Court did not rule against this Administration’s tariffs. It only said IEEPA can’t be used to raise revenue. We will immediately shift to other proven authorities — Sections 232, 301, and 122 — to keep our tariff strategy strong.”
Section 232 enables the government to levy tariffs or quotas on imports that threaten national security. Section 301 empowers the USTR to probe and retaliate against unfair trade practices of foreign countries. Section 122, now invoked to levy the uniform, and statutorily maximum, 15% tariff, authorises the administration to temporarily impose import levies for a maximum of 150 days to address balance-of-payments issues.
What the verdict means globally
The development must be seen in a global context, people in the know said.
First, the verdict limits the Trump administration’s power to arbitrarily impose tariffs — a move that may end the weaponisation of trade and restore predictable, rule-based commerce.
Second, the administration now has limited options to arm-twist countries. Sections 232, 301 and 122 are based on factual “cause and effect” principles with caps on tariff levels and limitations on their continuation, such as requiring Congressional approval.
Third, while several countries including India have negotiated but not yet signed legal trade agreements with the US, many countries with firm agreements may seek redressal.
A fourth expected development relates to refunds. Many importers are expected to file claims with the US government for refunds of the excess tariff that was illegally imposed. Some have told exporters in various countries, including India, that they would share refunds with them, the people said. Exporters, importers and American consumers shared the brunt of high tariffs, mainly on labour-intensive products the US is bound to import. Prices of various items are expected to fall, they added.
Federation of Indian Export Organisations (FIEO) director general and CEO Ajay Sahai said: “As USA and India are valued partner for each other, some mutually beneficial solution is expected soon.” He expects a realignment of tariffs proposed before the verdict. “In view of the fact that reciprocal tariff goes away, and tariff on all countries has come down to 15%, the 18% tariff becomes irrelevant,” he added.
Deloitte India partner Gulzar Didwania said the verdict, which struck down reciprocal tariffs terming them beyond the legal authority of the President, means tariffs will no longer apply on goods cleared in the US on or after February 20, 2026.
“This will provide a big relief to the exports from India of products such as gems and jewellery, textiles, selected automobiles, engineering goods etc which were subject to reciprocal tariffs,” he said. The ruling, however, does not apply to products subject to Section 232 levies such as steel, aluminium, copper and their specified derivatives, which continue to attract 50% tariffs, he added.
On the proposed BTA, Didwania said: “The BTA covered several aspects such as reciprocal tariffs rate, removal of Russian penalty, quota based concessional tariffs on products subject to section 232 tariffs and non-tariff restrictions. While the reciprocal tariffs will no more be applicable due to the Supreme Court’s ruling, all other areas shall continue to remain covered and be subjected to the concessions agreed under the BTA.”
He added: “Considering the reciprocal tariffs [18% proposed for India] will no more be valid, the question of levying 18% rate would not arise. If all other countries pay [15%], Indian exports will also be subjected to the same rate or tariffs. Further, this [15%] levy is temporary in nature and subject to approval of the Congress beyond the period of 150 days.”
The labour-intensive textile sector, among the worst-hit industries, remains wary. Confederation of Indian Textile Industry (CITI) chairman Ashwin Chandran said the body is analysing the implications of the latest developments. “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,” he said.
Some labour-intensive sectors, however, took a sigh of relief. Kama Jewelry managing director Colin Shah called the tariff revocation with a [15%] surcharge “a major relief to Indian gems and jewellery exporters”, saying it would address the demand-supply vacuum created by the earlier steep duties.
“The Court’s ruling is a reminder that any trade measure has to conform to constitutional processes and that predictability is a high priority in global trade. While the new development is a change in the paradigm, it is also true that exporters still have to walk a tight rope,” Shah said, adding that he is hopeful the India-US trade relationship will continue to move in a constructive manner, bringing stability and growth to the sector.