In February 2026 the United States and India announced a framework for an interim trade agreement. The US removed the extra 25% duty it had imposed over India’s purchases of Russian oil and said it would apply an 18% reciprocal tariff to Indian goods, down from a combined 50%. Two weeks later, on 20 February 2026, the US Supreme Court held that the IEEPA statute behind those reciprocal tariffs does not authorise tariffs at all. Since then the duties on Indian goods have rested on other laws: a 10% surcharge under Section 122 from 24 February to 24 July 2026, and from 24 July a 10% duty under Section 301.
Status in mid-October 2026: the interim agreement has not been signed. India’s Commerce Minister Piyush Goyal said the first tranche is finalised and in legal drafting, and the Commerce Secretary said the outcome of the US Section 301 investigations still has to be factored in (Business Today, 15 October 2026). The 18% rate described below was announced but, as far as official notices show, never took effect.
For Indian businesses that export textiles, leather, chemicals, gems, machinery and industrial goods to the United States, each of these changes moved landed costs, the value of getting the HS code right, and the compliance work around origin and documentation. As a trade compliance specialist and the creator of TariffWolf, an HS code classification tool, I have followed this since the reciprocal tariffs began in April 2025. This article sets out what changed and when, which sectors were affected, what the Section 301 investigations mean for Indian exporters, and the practical steps to take now.
Timeline of the US-India tariff dispute
April 2025: Executive Order 14257 announced country-specific reciprocal tariffs, citing the large and persistent US goods trade deficit. India’s announced rate was 26%, but the country-specific rates were suspended within days and a 10% baseline tariff applied instead until 7 August 2025.
July to August 2025: the dispute escalated. A 25% reciprocal rate for India, announced on 31 July, applied from 7 August 2025. A further 25% duty, imposed by Executive Order 14329 over India’s continued purchases of Russian oil, applied from 27 August 2025. Together they brought the additional duty on most Indian goods to 50%, one of the highest rates the US applied to any trading partner.
The sectors hit hardest included textiles and apparel, gems and jewellery, leather and footwear, organic chemicals, furniture, marine products, automobiles and auto parts, and iron, steel and aluminium products. Pharmaceuticals and generic drugs were largely exempt, and IT services, as services, were outside goods tariffs altogether.
September to December 2025: India held to its position on energy purchases and continued trade talks with other partners; the India-EU free trade agreement was announced on 27 January 2026. Indian exports to the US recovered in November 2025, rising 22.6% year on year to US$6.98 billion according to commerce ministry data, despite the 50% tariff.
2 to 7 February 2026: President Trump and Prime Minister Modi announced a trade deal on 2 February. On 6 February, Executive Order 14384 removed the extra 25% Russian-oil duty on Indian goods from 7 February, stating that India had committed to stop directly or indirectly importing Russian oil. The same day the two governments issued the United States-India Joint Statement setting out the framework for an interim agreement (summarised in the next section).
20 February 2026: in Learning Resources, Inc. v. Trump the Supreme Court ruled 6-3 that the International Emergency Economic Powers Act (IEEPA) of 1977 does not authorise the President to impose tariffs. All IEEPA-based tariffs, including the reciprocal tariffs, fell with it. The Court did not decide how refunds should work.
24 February to 24 July 2026: the administration replaced the IEEPA tariffs with a 10% tariff on imports from all countries under Section 122 of the Trade Act of 1974, a provision that allows a surcharge for at most 150 days unless Congress extends it. India’s Ministry of Commerce confirmed the 10% rate in a Lok Sabha reply on 17 March 2026 (Unstarred Question 3943). A higher 15% rate was announced in February but not applied to India.
11 March 2026: USTR opened Section 301 investigations into “structural excess capacity” in manufacturing in 16 economies, including India (details below).
24 July 2026: when the Section 122 surcharge expired, USTR’s final action in its Section 301 forced labor investigations took effect. India is in the group of 17 economies charged an additional 10% (USTR, 23 July 2026).
What the February 2026 framework offered
Under the Joint Statement, the US said it would apply an 18% reciprocal tariff under Executive Order 14257 to Indian goods, naming textiles and apparel, leather and footwear, plastic and rubber, organic chemicals, home décor, artisanal products and certain machinery. Once the interim agreement was concluded, it would remove the reciprocal tariff on goods listed in the annex to Executive Order 14346, including generic pharmaceuticals, gems and diamonds, and aircraft parts, and remove certain Section 232 tariffs on Indian aircraft and aircraft parts. Outcomes for generic pharmaceuticals were made contingent on the US Section 232 investigation of pharmaceuticals.
India said it would eliminate or reduce tariffs on all US industrial goods and on a range of US food and agricultural products, address non-tariff barriers (including on medical devices, ICT import licensing and standards), and that it intends to buy US$500 billion of US energy products, aircraft and parts, precious metals, technology products and coking coal over five years. Both sides agreed to cooperate on inbound and outbound investment reviews and export controls.
The 18% figure was a reduction from 50%, but it was never a return to the pre-2025 position, when most Indian goods entered the US at their normal HTSUS rates, often in the low single digits depending on the HS classification. The reciprocal tariff was IEEPA-based, so the Supreme Court ruling removed the legal basis for it before, as far as official notices show, it was implemented. Any preferential rate for India will now depend on the text of the interim agreement and the legal authority the US uses for it.
What it would have meant by sector
The sector analysis below was written for the 18% rate. The mechanics still apply to whatever additional duty is in force: the duty on a garment, a pendant or a chemical is the HTSUS rate for its 10-digit code plus the additional duty, so the classification decides both parts.
For textile and apparel exporters, the duty on most garments would have been the normal HTSUS rate plus 18%. That is far better than 50% but still a cost that needs renegotiated contracts with US buyers, adjusted FOB prices and new landed cost calculations.
Gems and jewellery exporters were among the hardest hit at 50% and stood to gain most. HTSUS subheadings in Chapter 71 carry different normal duty rates, which combine differently with any additional duty, so these exporters should check their classifications line by line.
For chemical exporters, particularly of organic chemicals in HS Chapter 29, the 18% rate would have applied in most cases. A classification review can show whether a genuine change of formulation would move a product to a different heading with different duty treatment.
Leather and footwear were named in the Joint Statement. These exporters lost ground to Chinese and Vietnamese suppliers at 50% and would have recovered some of it.
For machinery and engineering goods, the answer depends on the 8- or 10-digit HTSUS line. Some machinery subheadings in Chapters 84 and 85 appear in the Potential Tariff Adjustments for Aligned Partners annex to Executive Order 14346, so exporters need to check each HTSUS line. How country-specific tariff variations affect a supply chain is covered in a separate article.
Goods to be exempted under the framework
Generic pharmaceuticals were to be exempt, subject to the pharmaceutical Section 232 findings. India supplies approximately 50% of the generic drugs used in the US, and generics had already been largely carved out of the 2025 tariffs.
Gems and diamonds under particular classifications were among the goods listed for removal of the reciprocal tariff, depending on the annex listings under Executive Order 14346.
Aircraft parts were named for tariff removal. Indian aerospace component makers should confirm the HTSUS classification of each part, by binding ruling where the stakes justify it, before relying on any exemption.
IT services are not goods and fall outside goods tariffs entirely, whatever the legal basis.
The 2026 Section 301 investigations
Section 301 of the Trade Act of 1974 lets the US act against foreign practices it finds unreasonable or discriminatory and burdensome to US commerce, including market access barriers and non-tariff barriers. A finding can lead to tariffs on specific products, separate from any reciprocal tariff framework. Two sets of investigations matter for India in 2026.
The first, opened on 11 March 2026, covers structural excess capacity and production in manufacturing sectors in 16 economies: Bangladesh, Cambodia, China, the European Union, India, Indonesia, Japan, Korea, Malaysia, Mexico, Norway, Singapore, Switzerland, Taiwan, Thailand and Vietnam. Written comments were due on 15 April 2026 and the public hearing began on 5 May 2026.
The second set, on forced labor, ended in the 10% duty on Indian goods that took effect on 24 July 2026. USTR placed India in the 10% group of economies that have a forced labor import prohibition, partly have one, or committed to one in a trade agreement.
What Indian exporters should do about Section 301
First, check whether your product category features in long-running US complaints about India’s trade practices, which have included market access in agriculture and dairy, digital trade and medical devices. Several of these appear in the February Joint Statement.
Second, follow the USTR website and the Federal Register for the excess-capacity determination and for any list of products or HTSUS lines it names.
Third, if your industry association took part in the April comment round, keep its evidence on your sector up to date; USTR actions can include later comment or exclusion processes.
Fourth, ask a trade compliance specialist to assess whether your goods or business practices could be caught by the findings.
The Supreme Court ruling and IEEPA refunds
The February 2026 ruling matters to anyone who paid the IEEPA duties on Indian goods. The Court left refunds open; on 4 March 2026 the Court of International Trade ordered US Customs and Border Protection (CBP) to refund IEEPA duties on unliquidated entries, and CBP set up a refund process in its ACE system called CAPE (Consolidated Administration and Processing of Entries).
Refunds go to the importer of record. If you are an Indian exporter, talk to your US buyers: importers who paid the 25% or 50% duties on Indian goods may have refund claims they have not filed. If you shipped DDP, or your US subsidiary was the importer of record, check your own entries with a US customs broker or attorney, because eligibility depends on each entry’s liquidation status.
Practical compliance steps for Indian exporters
Step 1: audit and verify your HS classifications. With duties layered by law and by product, a wrong code can move a product into or out of an exempt list. Confirm the 6-digit HS subheading and the 10-digit HTSUS number used on the US import entry, and keep the reasoning on file as described in building an audit-proof HS classification file.
Step 2: recalculate landed costs for US-bound shipments at the duty actually in force, now the normal HTSUS rate plus the 10% Section 301 duty, and check whether a Section 232 duty applies to your product. If you ship DDP and bear the duty, price it in. If you ship EXW or FOB, make sure your US buyers have updated their own models.
Step 3: review your country-of-origin documentation. The Joint Statement provides for rules of origin so that the benefits go mainly to US and Indian goods. Make sure the commercial invoice, certificate of origin and packing list state the origin correctly and that your manufacturing process meets the substantial transformation test for claiming Indian origin.
Step 4: check export control classification where it applies. The Joint Statement commits both countries to cooperate on investment reviews and export controls. US export controls (the EAR) apply to US-origin items and to items with US content, so an Indian company that re-exports or incorporates US-origin dual-use goods, software or technology needs their Export Control Classification Number (ECCN). Indian-origin dual-use exports are controlled by India’s own SCOMET list. The site’s guide to ECCNs, the EAR and EAR99 explains the basics, and tools such as ECCN.help can help determine an ECCN before shipment.
Step 5: watch the interim agreement text. The February framework tied exemptions to the annex of Executive Order 14346, which was an IEEPA instrument. Which lines finally get preferential treatment will depend on the signed agreement and its legal basis, so check your HTSUS lines against it when it is published.
Step 6: follow the Section 301 dockets. The excess-capacity determination could add product-specific duties, and USTR processes can include exclusion requests.
Step 7: update your tariff data and classification process. Since April 2025 the additional duty on Indian goods has changed repeatedly under three legal authorities (IEEPA, Section 122 and Section 301). If your team relies on an old tariff database or manual lookups, check every US rate against the live HTSUS and current CBP guidance before quoting a price.
The broader US-India Bilateral Trade Agreement
The interim agreement is meant as a first step. The Joint Statement reaffirms the Bilateral Trade Agreement (BTA) negotiations that the two leaders launched on 13 February 2025, which are to cover further market access, rules of origin, non-tariff barriers, standards and conformity assessment, economic security, investment review and export control cooperation, technology trade and digital trade rules.
For Indian exporters the BTA is both an opportunity and a risk. A full agreement could remove the remaining additional duty on specific product categories, open US markets further to Indian services, and strengthen intellectual property protection for Indian pharmaceutical and technology companies. It will also ask India for concessions on agricultural market access, dairy, digital trade rules and ICT standards, all politically sensitive.
Agriculture and dairy remain the hardest issues. The US wants wider access to India’s farm market, and India has so far resisted. How that is settled will shape the tariff structure for Indian goods in the US for years.
If you need help classifying export products for US entry, TariffWolf provides HS classification, and ECCN.help covers ECCN and EAR questions. For advice on a specific situation, contact me.