In the wake of the Feb. 20 U.S. Supreme Court ruling striking down Trump's use of the International Emergency Economic Powers Act tariffs, India will likely delay implementing its trade deal with the United States while seeking opportunities to expand its Russian oil imports, but this will create a lingering risk of pharmaceutical tariffs. On Feb. 26, U.S. Secretary of Commerce Howard Lutnick met with Indian Commerce Minister Piyush Goyal in New Delhi to discuss trade. India and the United States had announced they reached a trade deal Feb. 2, under which U.S. President Donald Trump reduced the levy on Indian goods from 25% to 18% and eliminated the additional 25% duty India faced for importing Russian oil. A meeting to finalize the U.S.-India trade deal had originally been set for Feb. 22, but was postponed after the Supreme Court ruling and Trump's subsequent announcement of a 10% tariff on all countries under Section 122 of the Trade Act of 1974. While Trump has urged countries to honor agreements tied to the now-nullified tariffs, India has not formally signed the trade deal, meaning it is not bound by its commitments.

• Following the Supreme Court ruling, Trump initially announced a 10% global tariff. He later indicated it would rise to 15%, but ultimately only the 10% rate was implemented Feb. 24. 

The ruling benefits India by lowering duties to the new 10% rate, though its tariff advantage over regional rivals has narrowed. With the IEEPA tariffs struck down, the previous 18% reciprocal tariff rate on Indian exports no longer applies. As a result, U.S. tariffs have effectively returned to standard most-favored-nation levels in force before Trump's so-called "reciprocal tariffs" and the 10% tariff imposed under Section 122 on Feb. 24. A lower effective tariff would support export volumes and ease pressure on profit margins for Indian exporters. India's relative advantage over exporters such as Vietnam and Bangladesh under the 18% reciprocal tariff regime has narrowed, reducing the competitive edge its goods would have had in the U.S. market, particularly in sectors such as textiles and apparel, jewelry and certain agricultural products. Sector-specific tariffs imposed under national security provisions, including Section 232 duties on steel and automobiles, remain in effect and continue to apply to some Indian exports. These measures operate independently of the temporary global levy and are unaffected by the Supreme Court's ruling on emergency powers.

• India's primary competitors in the U.S. market include Vietnam, Bangladesh, Cambodia and Indonesia, all of which now face similar tariff treatment under the temporary 10% levy.
• India exported about $86.5 billion worth of goods to the United States between April 2024 and March 2025, up from about $77.5 billion between April 2023 and March 2024. This represents roughly 11.6 % growth year on year.

The Supreme Court ruling also removes Trump's ability to place tariffs on India over its Russian oil imports, creating an opportunity for India to gradually increase purchases as discounted Urals crude becomes more attractive. The ruling also removes Trump's ability to impose tariffs on countries that buy nonsanctioned Russian oil, allowing India to increase its Russian oil imports after scaling back due to U.S. pressure and trade negotiations. While sanctions on Russian energy exports remain in place, buyers have relied on intermediaries, non-Western insurers, alternative payment mechanisms and a large number of nonsanctioned Russian-linked vessels to continue trade. Reports indicate that Indian refiners have continued to limit purchases of Russian crude while awaiting guidance from the Indian government on the future of Russian crude sourcing. In February, imports are expected to average about 1.2 million barrels per day, the lowest level since November 2022. The decline has left large volumes of Russian oil struggling to find buyers, with some shipments stored in tankers at sea or redirected to ports in China and Singapore. As a result, discounts on Russia's Urals grade have widened to about $15-$20 below Dated Brent, making it more attractive to India.

With the Section 122 tariffs set to expire 150 days after they entered effect and the possibility of additional U.S. trade measures against it, India will likely remain officially committed to the Feb. 2 deal while delaying finalization until the U.S. government's future tariff strategy becomes clearer. The Supreme Court ruling and the postponed visit are unlikely to derail the U.S.-India trade deal, which Goyal has signaled India remains intent on finalizing. But India will adopt a wait-and-see approach before signing it pending clarity on the Trump administration's plans once tariffs expire after 150 days and to see what other steps Trump might take to tariff India. This is bolstered by Trump's suggestion of implementing other measures to maintain or reimpose tariffs. Extending Section 122 tariffs on India would require Congressional approval. It could then face legal challenges, as the provision permits such levies only in cases of a balance of payments deficit, which may not apply here. Trump might also attempt to impose tariffs on India via country-specific investigations under Section 301 of the Trade Act of 1974, which authorizes the Office of the U.S. Trade Representative to examine what Washington considers unreasonable or discriminatory practices by foreign governments that restrict or burden U.S. commerce. Although no countries have been designated as targets, the Office of the U.S. Trade Representative is investigating China and Brazil. Since India is not considered a top-priority partner for Section 301 investigations due to its relatively smaller trade impact, Washington may next focus on countries like Vietnam and Canada. Even if Washington decides to launch an investigation against India, these reviews typically take up to 18 months, giving India time to adjust its policies or trade practices. Concluding the U.S. trade deal, meanwhile, offers India many benefits, including greater market access and stronger bilateral relations, so New Delhi will likely proceed with it once Washington's intentions have become clearer.

Stalling, however, could cause Washington to use U.S. pharmaceutical tariffs as a cudgel to force India to accelerate the implementation of the trade deal. If the Trump administration views India's trade deal delays as excessive, it could increase pressure through trade measures, including Section 232 tariffs on pharmaceuticals. This is something Trump previously threatened to impose as part of a broader national security review. Trump previously proposed 100% tariffs, which could target branded and patented drugs unless companies establish U.S. manufacturing operations. Generic medicines would have been exempt, though he could broaden the scope of tariffs. Even broader tariffs on India's pharmaceutical sector — which contributes about 1.7% of gross domestic product, and sends roughly one-third of its exports to the United States — would have a limited overall effect on India's economy. Total Indian pharmaceutical exports stand at about $30 billion, or about 0.7% of GDP, with $10 billion to $12 billion going to the United States. India could challenge the measures at the World Trade Organization, but this would likely have little effect, since the WTO process is slow and the United States might manage to justify the tariffs under a broad national security exemption. Facing the specter of U.S. pharmaceutical tariffs, New Delhi would likely finalize the U.S. trade deal to secure exemptions or carve-outs for generic medicines while potentially accelerating efforts to diversify pharmaceutical exports to other markets, such as Germany, Japan, Nigeria and the United Kingdom.

• Trump announced a 100% tariff on Indian-branded and -patented pharmaceuticals Sept. 25, 2025, with an intended start date of Oct. 1, 2025. The measure was paused, and never formally implemented, but did help Washington secure agreements on drug pricing and domestic manufacturing investment.