Will US scrap its temporary 10% tariff on India? Key deadline ends today

If no new announcement is made, imports from India and several other US trading partners will revert to the normal Most Favoured Nation (MFN) tariff structure that was in place before April 2, 2025.

In Short

• Most Indian exports could return to normal MFN tariff rates if the levy lapses
• Nearly 92 per cent of India's US exports would benefit, GTRI said
• Indian exports have faced three different US tariff regimes in the past year

Will Indian exporters get a tariff breather, or is another trade shock around the corner? That question could be answered on Friday as a temporary 10 per cent US import tariff, imposed on countries including India, reaches the end of its 150-day life. If President Donald Trump's administration lets the measure expire without replacing it, most Indian goods entering the American market will once again face only the normal import duty from 9:31 am IST.

For businesses that have spent nearly a year navigating rapidly changing US trade policies, however, the uncertainty is far from over. Washington is also expected to unveil fresh decisions under separate trade investigations that could once again reshape the landscape for Indian exports.

WHAT IT MEANS FOR INDIA

According to news agency PTI, if no new announcement is made, imports from India and several other US trading partners will revert to the normal Most Favoured Nation (MFN) tariff structure that was in place before April 2, 2025.

In practical terms, this means many Indian exporters would no longer have to pay the additional 10 per cent surcharge introduced by the US earlier this year.

Take a garment exporter, for instance. A shirt shipped from India to the US normally attracts a 5 per cent MFN duty. Since February 24, that product has also carried an additional 10 per cent tariff under the temporary Section 122 measure. If the surcharge expires as scheduled, the same shirt will once again be subject only to the original 5 per cent duty.

According to the Global Trade Research Initiative (GTRI), nearly 92 per cent of India's USD 87.2 billion merchandise exports to the United States would once again fall under normal WTO-compatible US MFN tariffs.

The temporary surcharge, imposed under Section 122 of the US Trade Act of 1974, automatically expires after completing its maximum legal duration of 150 days. The tariff is applied based on when goods are cleared for consumption by US customs, rather than when they are shipped from India or arrive at American ports.

A YEAR OF UPS AND DOWNS

For Indian exporters, the past year has been anything but predictable.

The uncertainty began in April 2025, when President Donald Trump unveiled sweeping reciprocal tariffs on multiple countries, including a proposed 26 per cent tariff on Indian imports.

According to GTRI, Indian exports have since passed through three different tariff regimes.

Between August 27, 2025, and February 23, 2026, nearly 55 per cent of India's exports -- including engineering goods, textiles, garments, chemicals, machinery, plastics, leather products, gems and jewellery, furniture and several manufactured items -- were hit with the normal MFN tariff plus an additional 50 per cent levy. That consisted of a 25 per cent reciprocal tariff and another 25 per cent surcharge linked to India's purchases of Russian oil.

"However, another 37 per cent of India's exports, including smartphones, semiconductors, pharmaceuticals and energy products, were exempt from the reciprocal tariff regime and continued to pay only the applicable MFN tariff," GTRI Founder Ajay Srivastava told PTI.

The situation changed on February 20 this year after the US Supreme Court struck down Trump's reciprocal tariffs, ruling that the administration lacked authority under the International Emergency Economic Powers Act (IEEPA) to impose them.

Within days, the White House replaced those duties with the temporary 10 per cent surcharge under Section 122, which took effect on February 24.

NEW TARIFF THREAT STILL LOOMS

Even if Indian exporters get temporary relief on Friday, it may not last long.

The US government has already said it will announce the "final responsive action" under its ongoing Section 301 investigations involving 60 trading partners, including India, "as soon as tomorrow".

The investigations cover allegations related to forced labour in global supply chains and excess manufacturing capacity.

Under the forced-labour probe, Washington has proposed 12.5 per cent tariffs on 54 countries, including India, while six countries, including Pakistan, could face a proposed 10 per cent tariff.

Washington has also increasingly turned to country-specific tariffs in recent months, imposing unilateral duties on countries such as Brazil and Canada.

"While the expiry of Section 122 restores normal MFN tariff treatment for the overwhelming majority of Indian exports, the improvement may prove temporary. With Section 301 investigations nearing completion, the possibility of country-specific actions and sectoral tariffs on products such as generic medicines, Indian exporters continue to face considerable uncertainty in their largest overseas market," Srivastava said.

SOME SECTORS WON'T BENEFIT

Not every exporter will feel the impact of the tariff expiry.

Products covered under Section 232 national security tariffs -- including steel, aluminium, certain copper products, automobiles and specified auto components -- remain outside the temporary surcharge.

These products account for roughly 8 per cent of India's exports to the US and will continue to pay the normal MFN tariff along with the applicable Section 232 duties.

"For example, a steel product with a 2.5 per cent MFN tariff continues to face a total duty of 52.5 per cent, while aluminium products pay 55 per cent and covered auto components 27.5 per cent," he said.

Neither the reciprocal tariffs nor the temporary Section 122 surcharge applied to these products.

EXPORTERS SEE A CHANCE, BUT STAY CAUTIOUS

Exporters believe the expiry of the 10 per cent surcharge could improve the competitiveness of Indian products in the American market, particularly for labour-intensive industries and MSMEs that have faced higher costs over the past several months.

However, many remain cautious, noting that any relief could disappear quickly if the Trump administration replaces the expiring tariff with fresh country-specific duties.

The developments also come as India and the US continue negotiations on a bilateral trade agreement, with New Delhi seeking more favourable tariff access to strengthen the position of Indian exporters.

Trade data reflects the importance of the American market. During April-June 2026-27, India's merchandise exports to the US slipped marginally by 0.06 per cent to USD 25.46 billion, while imports from the US rose 23.82 per cent to USD 16.65 billion.

- Ends
With PTI inputs