Indian Exports Face Tariff Reversion as Temporary US Surcharge Expires on July 24

Indian Exports Face Tariff Reversion as Temporary US Surcharge Expires on July 24​

The temporary 10 percent Section 122 tariff imposed by the United States is set to expire on July 24, 2026. This expiry marks a significant inflection point for India’s merchandise exports to the US, setting the stage for a return to varied World Trade Organization (WTO) Most-Favoured-Nation (MFN) duty structures.

The Section 122 provision, rarely used, allows temporary tariffs of up to 15 percent to address balance-of-payments deficits. Originally invoked following the Supreme Court striking down earlier tariff attempts under IEEPA, the administration’s temporary measure reached its statutory limit after 150 days.

What Reverts as Section 122 Expires?​

At 1:01 a.m. EDT on July 24 (9:31 a.m. IST), approximately 92 percent of India’s $87.2 billion merchandise exports to the US will revert from the flat 10 percent surcharge. These products will instead be governed by MFN rates, which vary widely by product category.

The relief under Section 122 was significant for sectors like pharmaceuticals and semiconductors, which benefit from lower or zero duties. However, labour-intensive goods such as textiles and garments face higher existing MFN tariffs. GTRI notes that the expiry reduces import duties by 10 percentage points for the majority of exports previously subject to the surcharge.

Section 232 Duties Continue on Targeted Industries​

While the temporary 10 percent surcharge concludes, certain critical sectors remain under duress. Products covered by Section 232 national security tariffs account for around 8 percent of Indian exports to the US and include steel, aluminium, specified auto components, and copper products.

These goods will continue to face the applicable MFN tariff combined with additional Section 232 duties. GTRI estimates that steel products which carry a 2.5 percent MFN tariff still face a total duty of 52.5 percent. Aluminium products are estimated to face 55 percent, while covered auto components face 27.5 percent.

Navigating the Long-Term Tariff Roadmap: Section 301 Probes​

The expiry of the temporary surcharge does not indicate an end to US tariff action. The administration is actively establishing a more durable framework through ongoing Section 301 investigations, which require formal public comment and investigation by the Office of the US Trade Representative (USTR).

One probe, launched in May 2026, examines whether over 50 trading partners, including India, have sufficiently prevented forced labour goods from entering global supply chains. USTR proposed an additional 12.5 percent tariff on imports from these countries, pending the conclusion of the public consultation phase.

A second investigation, initiated in June 2026, focuses on structural excess manufacturing capacity across about 15 economies, seeking to determine if government policies that encourage overproduction are distorting global trade.

Pharmaceutical Sector Faces Extreme Future Tariff Risk​

Separately from the MFN rate adjustments, the pharmaceutical industry faces a critical long-term tariff risk concerning imported generic medicines. Although Indian pharma exports are unaffected by the current Section 122 surcharge, the Trump administration has proposed steep duties in the future.

The proposal includes imposing a 100 percent tariff on imported generic medicines starting from August 2028. This duty is slated to rise dramatically to 200 percent beginning in August 2029. The policy objective stated for this measure is to incentivize pharmaceutical companies to shift production towards the US.