What Happened
- While the US Supreme Court struck down broad reciprocal tariffs imposed under the International Emergency Economic Powers Act (IEEPA) on February 20, 2026, several other US tariffs continue to affect Indian exporters.
- Section 232 tariffs on steel and aluminium — initially 25% on steel and 10% on aluminium in 2018, subsequently raised to 50% in June 2025 — remain in effect as they are imposed under the Trade Expansion Act of 1962, not IEEPA.
- The US suspended the "de minimis" exemption for imports valued below $800 per person per day in August 2025, removing a critical duty-free channel used by Indian small exporters and e-commerce companies.
- Following the Supreme Court ruling, President Trump issued a 10% global tariff via executive order (later raised to 15%), which applies across all countries including India.
- India-US bilateral trade reached $186 billion in 2024-25 (India's exports: $86.5 billion; imports: $45.3 billion), making the US India's largest trading partner.
Static Topic Bridges
Section 232 Tariffs — Legal Basis and Scope
Section 232 of the Trade Expansion Act of 1962 authorises the US President to impose tariffs if the Secretary of Commerce determines that certain imports threaten to impair national security. Unlike IEEPA-based tariffs (struck down by the Supreme Court), Section 232 tariffs have an explicit statutory basis for trade restrictions and have withstood legal challenges. The Trump administration imposed 25% on steel and 10% on aluminium under Section 232 in 2018 (first term), and in June 2025 raised these to 50%.
- Legal basis: Trade Expansion Act of 1962, Section 232 — national security-based tariffs
- Original rates (2018, first Trump term): 25% on steel, 10% on aluminium
- June 2025 revision: raised to 50% on steel and aluminium; derivative products also covered
- Unlike IEEPA tariffs, Section 232 tariffs were NOT struck down by the February 2026 Supreme Court ruling
- Indian steel and aluminium sectors directly affected — India is a significant exporter of steel and aluminium products to the US
- Comparison: India's comparable protective regime uses anti-dumping duties and safeguard measures under the Customs Act 1962 and the Customs Tariff Act 1975
Connection to this news: Even after the Supreme Court blocked the broad reciprocal tariff framework, Section 232 tariffs continue to burden Indian foundries and metal exporters — representing a structural tariff barrier separate from the diplomatic reciprocal tariff dispute.
De Minimis Exemption — What It Is and Why Its Removal Matters for India
The de minimis exemption in US customs law (19 U.S.C. § 1321) allowed imports valued at $800 or less per shipment per person per day to enter the US duty-free. This provision was heavily utilised by cross-border e-commerce — particularly by small Indian exporters selling textiles, toys, cosmetics, accessories, and handicrafts directly to US consumers via platforms like Amazon, Etsy, and direct-to-consumer channels.
- Threshold: $800 per person per day (raised from $200 in 2016 — a 400% increase that supercharged cross-border e-commerce)
- Suspension: August 2025 — US suspended de minimis for shipments from countries with most-favoured-nation (MFN) status when certain conditions are met; applied to India
- Post-SCOTUS ruling (February 20, 2026): Trump issued a new executive order maintaining suspension of de minimis — applies even through the international postal network
- Impact on India: Hundreds of thousands of small exporters — especially in textiles (Surat, Tiruppur), handicrafts, and beauty products — lose a zero-duty channel into the world's largest consumer market
- India's e-commerce exports to the US have grown rapidly under the de minimis route
- WTO Most Favoured Nation (MFN) principle: binds all WTO members to apply the same tariff rate to all other WTO members (exceptions: RTAs, developing country preferences); de minimis suspension overrides MFN for sub-threshold shipments
Connection to this news: The de minimis suspension has a disproportionate impact on India's MSMEs and e-commerce exporters — a different and less-discussed dimension of the US-India tariff dispute that persists regardless of IEEPA tariff outcomes.
India-US Trade Relationship — BTA Framework and Trade Architecture
India and the US announced a framework for a Bilateral Trade Agreement (BTA) in February 2026, with PM Modi and President Trump agreeing on an interim deal. The US agreed to lower the reciprocal tariff from 25% to 18% for India's top exports (clothing, pharmaceuticals, gems, textiles), and India committed to reduce or eliminate tariffs on all US industrial goods and several agricultural products. However, the Supreme Court's IEEPA ruling now makes the 18% reciprocal tariff legally uncertain, creating renegotiation pressure.
- India-US BTA negotiations launched: February 13, 2025 (Modi-Trump meeting)
- Interim agreement framework: February 6, 2026; US reciprocal tariff on India → 18% (from 25%)
- Supreme Court ruling (February 20, 2026, Learning Resources v. Trump, 6-3): IEEPA does not authorise tariffs → IEEPA-based tariffs struck down
- Post-ruling Trump executive order: 10% global tariff (raised to 15%) as replacement
- Goods with zero US tariff under interim deal: gems and diamonds, pharmaceuticals, smartphones, handicrafts, tea, coffee
- BTA implementation timeline: interim deal expected April 2026; full BTA by late 2026 or 2027
- India-US bilateral goods trade (2024-25): $186 billion; US is India's single largest export destination
Connection to this news: The Section 232 and de minimis barriers represent the "floor" of tariff challenges for India — ones that remain regardless of how the reciprocal tariff diplomatic dispute is resolved, highlighting the complexity of the bilateral trade architecture.
Key Facts & Data
- India-US bilateral trade (2024-25): $186 billion ($86.5 billion exports, $45.3 billion imports)
- Section 232 steel tariff: 50% (raised from 25% in June 2025)
- Section 232 aluminium tariff: 50% (raised from 10% in 2018 → 25% in 2025 → 50% in June 2025)
- De minimis threshold: $800 per person per day (raised from $200 in 2016)
- De minimis suspension: August 2025 (maintained post-SCOTUS ruling, February 2026)
- IEEPA tariffs struck down: Learning Resources, Inc. v. Trump, US Supreme Court, February 20, 2026 (6-3)
- Post-ruling US global tariff: 10-15% executive order tariff (not IEEPA-based)
- India-US interim BTA: reciprocal tariff on India → 18%; expected operationalisation April 2026