India's US Tariff Rate Cut to 10% Amid Trump's New Global Levy

Introduction to the New Tariff Regime

In a swift response to a major legal setback, the White House has announced a new 10% global tariff on all imports, a move that directly impacts major trading partners, including India. The executive order, signed by President Donald Trump, follows a US Supreme Court ruling that invalidated his previous authority to impose sweeping duties. Effective February 24, 2026, this new tariff temporarily replaces previously negotiated rates, creating a new landscape for international trade.

The Supreme Court's Landmark Ruling

The catalyst for this policy shift was a 6-3 decision by the US Supreme Court, which ruled that President Trump's use of the 1977 International Emergency Economic Powers Act (IEEPA) to unilaterally impose tariffs was unconstitutional. The court's majority concluded that the power to levy tariffs and taxes rests with Congress, not the president. The ruling was a significant rebuke of a cornerstone of Trump's economic agenda. President Trump reacted strongly, terming the decision "terrible" and "a disgrace," and asserting that the court's decision would not limit his ability to protect the country's economic interests.

Trump's Immediate Counter-Move

Hours after the court's decision, President Trump enacted a new 10% global tariff by invoking Section 122 of the Trade Act of 1974. This legal provision allows the president to implement a temporary import surcharge, up to 15%, for a maximum of 150 days to address balance-of-payments deficits. This action effectively bypasses the Supreme Court's ruling by using an alternative legal authority. The White House confirmed the new duty will be applied on top of any normal tariffs already being charged and will remain in place for approximately five months while the administration conducts investigations for potentially fairer, or different, tariff structures.

Impact on India's Trade Deal

For India, the new global tariff brings an immediate and unexpected change. A White House official confirmed that India will now pay a 10% tariff, replacing the 18% rate that was part of a recently announced interim trade agreement framework. This framework had already reduced the punitive tariffs on Indian goods from a high of 50% down to 18%. The new 10% levy provides short-term relief for Indian exporters, but it also supersedes the bilateral agreement, introducing fresh uncertainty into the trade relationship. President Trump maintained that the deal with India is still "on," but would be implemented in a different way.

Tariff Rate Comparison: India-US Trade

A summary of the recent changes in tariff structures applicable to Indian exports to the US highlights the fluid nature of the situation.

Broader Global Implications

The 10% tariff is not limited to India. A White House official confirmed that other key trading partners, including the United Kingdom, Japan, and the European Union, will also be subject to the new rate, regardless of any prior deals. Furthermore, the administration extended a suspension of the de minimis exemption, which previously allowed goods valued under $100 to enter the US duty-free. These low-value goods, often from e-commerce retailers, will now be subject to the 10% tariff, broadening the scope of the new policy.

Financial and Legal Fallout

The Supreme Court's decision has created significant uncertainty regarding the approximately $175 billion in tariff revenue collected under the now-invalidated IEEPA. When asked about potential refunds, President Trump indicated that the matter would have to be litigated, suggesting a prolonged legal battle that could take years to resolve. Treasury Secretary Scott Bessent stated that despite the change in tariff authority, the administration expects tariff revenue in 2026 to remain "virtually unchanged," indicating confidence in the new measures to maintain revenue streams.

Analysis of the New Trade Strategy

The rapid pivot from one tariff authority to another demonstrates a resilient commitment to a protectionist trade agenda. By using Section 122, the administration has found a temporary but potent tool to maintain leverage in global trade negotiations. While countries like India benefit from a lower tariff rate in the short term, the 150-day limit means this is a stopgap measure. The administration has also signaled that other investigations under Section 232 (national security) and Section 301 (unfair trade practices) are underway, which could lead to different, and potentially higher, tariffs in the future.

Conclusion

The recent developments represent a significant escalation in US trade policy, marked by a legal defeat followed by a swift and decisive executive action. The new 10% global tariff redefines the terms of trade for India and other key partners, offering temporary rate reductions but creating long-term unpredictability. As the 150-day period for the current tariff unfolds, all eyes will be on the administration's next steps and the outcome of its ongoing trade investigations, which will shape the future of global commerce.