US-India tariff relations have been highly volatile under the second Trump administration (2025–2026), marked by escalating duties linked to trade imbalances, India’s Russian oil purchases, legal challenges, interim deal frameworks, and a new potential 100% tariff authority over Russian energy imports. Negotiations for a broader bilateral trade agreement (BTA) continue but remain incomplete.
Key Timeline of Developments
· April–August 2025 : The US imposed reciprocal tariffs starting at ~26% (later adjusted), then a 25% reciprocal tariff on Indian goods. An additional 25% penalty was added for India’s continued Russian oil purchases, bringing effective rates on some goods to as high as 50%. India called the measures unfair and emphasized energy security needs.
· February 2026 : The two sides announced a framework for an interim trade agreement. The US agreed to lower the reciprocal tariff to 18%, drop the 25% Russian-oil-linked penalty, and offer exemptions or reductions on certain items (e.g., some pharmaceuticals, gems/diamonds, aircraft parts). India committed to reducing or eliminating tariffs on a range of US industrial goods, agricultural products (e.g., tree nuts, fruits, soybean oil, wine/spirits), and large purchases of US energy, aircraft, tech, and other goods (targeted at ~$500 billion over time). Section 232 national-security tariffs on steel/aluminum largely remained, with limited exemptions (e.g., certain aircraft parts).
· February 2026 (Supreme Court ruling) : The US Supreme Court struck down the use of the International Emergency Economic Powers Act (IEEPA) for many of the emergency/reciprocal tariffs. The US then imposed a temporary 10% surcharge (under Section 122 of the Trade Act of 1974) on many imports, including from India, for 150 days.
· July 2026 : After the temporary 10% surcharge expired, the US imposed a new additional 10% duty on Indian goods under Section 301 (linked to forced-labor concerns in supply chains). India secured the lower end of the rate (reduced from a proposed 12.5%) after policy adjustments prohibiting forced-labor imports. Roughly 45% of India’s exports to the US (including many pharmaceuticals, smartphones, and items already under Section 232) were exempt. India noted continued engagement on the BTA.
· September 2026 (current as of mid-September) : The US House of Representatives passed (and the Senate had earlier approved) the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026. It authorizes the president to impose tariffs of up to 100% on goods from the top five importers of Russian crude oil or natural gas (India ranks among them) if they continue such purchases after a grace period, subject to exemptions and presidential discretion. The bill was sent to President Trump. India reaffirmed commitment to balanced, mutually beneficial trade while prioritizing energy security through diversified sources and stated it would protect its interests. No automatic 100% tariffs are in force yet.
Current Tariff Landscape (as of September 2026)
· Most affected Indian exports face normal US most-favored-nation (MFN) rates plus an additional ~10% (from the Section 301 measures), though exact effective rates vary by product and exemptions.
· Significant portions of trade (pharma, certain electronics, energy-related items, and Section 232-covered metals/auto parts) benefit from exemptions or separate treatment.
· Section 232 tariffs on steel, aluminum, and related products continue to apply in most cases, with limited carve-outs negotiated earlier.
· India’s tariffs on many US goods remain higher on average in some sectors (agriculture, industrial items), which has been a long-standing US complaint, the interim framework included Indian commitments to lower many of these.
· Bilateral goods trade is substantial (India is a major US partner), recent monthly export data showed recovery/growth in Indian shipments to the US as tariff regimes adjusted.
Broader Context and Outlook
· India maintains strategic autonomy on energy (Russian oil has been discounted and important for domestic needs) while engaging the US on trade. The US has used tariffs as leverage on trade deficits, labor practices, and Russia-related issues. Both sides have expressed interest in a durable BTA that could further reduce barriers, boost supply-chain resilience, and expand two-way trade (with earlier goals around significantly higher volumes).
· As of the latest reports, the 100% tariff authority is newly available but not yet applied; implementation would depend on presidential action, India’s oil import levels, and any exemptions. Talks on the interim agreement and full BTA continue, with Indian officials indicating readiness to finalize once preferential treatment relative to competitors is secured.
· Relations remain complex—cooperation in defense, technology and geopolitics coexists with persistent friction over tariffs and energy policy. For the most precise product-level rates, official US HTS schedules, USTR notices or Indian Commerce Ministry updates should be consulted, as rates and exemptions evolve.