From 9:31 am on Friday, Indian exporters will receive a significant tariff relief in the US market as the 10% Section 122 import surcharge expires. However, if the US extends this levy or imposes another set of tariffs under Section 301 of the Trade Act overnight, then exporters will have to make different adjustments.
From 9:31 am on Friday, around 92% of India’s $87.2 billion merchandise exports to the US will once again be subject only to the normal WTO-compatible US most-favoured-nation (MFN) tariffs, a report by Global Trade Research Initiative (GTRI) said.
The remaining 8% of India’s exports, including steel, aluminium and auto components covered under Section 232, remain subject to high national security tariffs with no relief.
Tariff deadline and applicability
The surcharge, imposed under Section 122 of the US Trade Act,1974, expires at 12:01 am EDT on July 24 (9:31 am IST). The tariffs apply based on the exact date and time when the goods are entered for consumption or withdrawn from a US customs warehouse, rather than when they are shipped or arrive at a US port.
However, two investigations by US Trade Representatives under Section 301 of the Trade Act are in progress. The one on use of forced labour products is nearing completion and the next set of duties are likely to be introduced under this section.
Indian exports experienced three US tariff regimes in less than a year—from 50% reciprocal tariffs to a 10% Section 122 surcharge and are now back to MFN tariffs.