India-US tariffs after Supreme Court verdict: An explainer:18% or 25% or 15%? How much tariffs India faces now?

From 10% to 26% to 25% to 50% then back to 25% and then to 10% and now at 15% – India has really gone through a rollercoaster ride since 2 April 2025. India has faced a series of changing tariffs from the US in last 10 months. After all the ‘Trump Tariff’ tantrums and the US Supreme Court’s striking down of the reciprocal tariffs, the final import duty to be levied on Indian exports to America probably stands at 15%. But if the current terms and conditions of the India-US interim trade deal remain unchanged as claimed by US President Donald Trump, then India may have to pay 18% tariffs. India’s Tariff Situation: A Rollercoaster Ride Initial Tariffs: Before 2 April 2025, only MFN duties were imposed on India. The US initially imposed a 10% baseline tariff on some Indian goods. This was later increased to 26 and then to 25%. Additional Penalties: The US added another 25% tariff on India for buying oil from Russia, bringing the total up to a hefty 50%. Easing Tensions: After some discussions, the US agreed to lower the total tariff to 18% and remove the extra penalty for the Russian oil deal. (But this has not been implemented yet.) The Latest Change: Now, the US has announced a temporary, across-the-board import surcharge of 10% (later increased to 15%) on many goods. This means that Indian goods will now face a 15% reciprocal tariff, which is a significant drop from the previous 25%. What are Tariffs? Tariffs are essentially taxes on imported goods. When a company in India exports goods to the US, the US government charges a tariff on those goods. The company importing the goods usually pays this tariff. To cover this cost, companies often increase the price of their products, which means consumers end up paying more. Reciprocal Tariffs: Playing Fair? The idea of “reciprocal tariffs” (RT) came about because the US wanted to ensure fair trade. The US government, under President Trump, felt that some countries were charging high tariffs on American goods, making it difficult for US companies to sell their products abroad. So, the US decided to impose its own tariffs on goods from those countries. The goal was to create a level playing field. If a country charges a 15% tariff on US goods, the US would charge a similar 15% tariff on goods coming from that country. How the New Tariff Works? Let’s say you’re exporting a product from India to the US that already has a regular import duty (called an MFN duty) of 5%. Under the old system, you’d have to pay that 5% plus an additional 25% reciprocal tariff, for a total of 30%. Now, with the new 15% surcharge, you’ll only pay 5% + 15% = 20%. This makes Indian goods more competitive in the US market. Temporary Relief It’s important to note that this 15% surcharge is temporary. It will last for 150 days (about five months). After that, it’s unclear what the US will do with its tariffs on countries like India. What About the India-US Trade Deal? India and the US have been working on a trade deal for some time. The goal is to reduce trade barriers and increase trade between the two countries. Expert Opinions: Re-evaluate the Deal Some trade experts believe that India should reconsider the terms of the trade deal with the US, now that the US has lowered its tariffs for everyone. The original deal was based on Trump reducing tariffs specifically for India, but now that the US has lowered tariffs for all nations, India may not be getting as much of a benefit. Trump’s View: No Change to the Deal Despite the changes in tariffs, President Trump has stated that the trade deal with India remains the same. What Goods are Exempted? Some goods are exempt from the new 15% surcharge. These include: Critical minerals and metals: These are important for the US economy and defence. Energy products: The US needs to ensure a stable supply of energy. Certain agricultural products: The US may not produce enough of these products to meet domestic demand. Pharmaceuticals: The US wants to ensure access to affordable medicines. Certain electronics, vehicles, and aerospace products: These are important industries for the US economy. Sector-Specific Tariffs Remain It’s important to remember that some tariffs on specific sectors, like steel, aluminum, and certain auto parts, will remain in place. These tariffs are set at 50% for steel, aluminum and copper and 25% for select auto components. Why the US Imposes Tariffs? The US government has said that it imposes tariffs because it believes that some countries, including India, have unfairly high tariffs on American goods. The US also has a trade deficit with India, meaning it imports more goods from India than it exports to India. India-US Trade: A Big Relationship The US is India’s largest trading partner. In 2024-25, the total trade between the two countries was worth $186 billion (₹16.74 lakh crore.) India exports more goods to the US than it imports, resulting in a trade surplus for India. India’s main exports to US: India’s main imports from US: The Bottom Line The reduction in tariffs from the US is good news for Indian businesses. It makes their products more competitive in the US market and could lead to increased exports. However, the change is temporary, and the long-term impact will depend on the final terms of the India-US trade deal.