India’s tariff cut to 10 pc as Trump issues proclamation on new levy

India now faces a lower tariff rate of 10 per cent, down from 18 per cent, after US President Donald Trump announced a new global levy on items imported into America in the wake of the Supreme Court verdict against his sweeping tariffs.

In a proclamation titled “Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems”, Trump said he is imposing, for a period of 150 days, a “temporary import surcharge of 10 per cent ad valorem” on articles imported into the United States, effective February 24.

10 per cent tariff

Given this new tariff rate of 10 per cent, which will be applicable on countries around the world, Indian goods being imported into the US would no longer be subject to the 18 per cent tariff rate that had been decided on following the announcement of a framework for an Interim Agreement on trade between India and the US.

In a major setback to Trump’s pivotal economic agenda in his second term, the US Supreme Court, in a 6-3 verdict written by Chief Justice John Roberts, ruled that the tariffs imposed by Trump on nations around the world were illegal and that the president had exceeded his authority when he imposed the sweeping levies.

Also Read: US Supreme Court strikes down Trump's global tariffs

Earlier this month, as the US and India announced they reached a framework for an Interim Agreement on trade, Trump issued an Executive Order removing the 25 per cent punitive tariffs imposed on India for its purchases of Russian oil, with the US president noting the commitment by New Delhi to stop directly or indirectly importing energy from Moscow and purchasing American energy products.

Under the trade deal, Washington would charge a reduced reciprocal tariff on New Delhi, lowering it from 25 per cent to 18 per cent.

Trump signs proclamation

Trump signed the proclamation “imposing a temporary import duty to address fundamental international payments problems and continue the Administration’s work to rebalance our trade relationships to benefit American workers, farmers, and manufacturers”.

A fact sheet issued by the White House said Trump is invoking his authority under Section 122 of the Trade Act of 1974, which “empowers the President to address certain fundamental international payment problems through surcharges and other special import restrictions”.

Also Read: US Supreme Court throws India a lifeline. Will Modi take it?

The proclamation imposes, for a period of 150 days, a 10 per cent ad valorem import duty on articles imported into the United States. The temporary import duty will take effect on February 24 at 12.01 am eastern standard time.

Goods exempt from ‘temporary import duty’

The fact sheet noted that some goods will not be subject to the temporary import duty because of the needs of the US economy or in order to ensure the duty more effectively addresses the fundamental international payments problems facing the United States.

The goods include certain critical minerals, metals used in currency and bullion, energy, and energy products; natural resources and fertilisers that cannot be grown, mined, or otherwise produced in the United States or grown, mined, or otherwise produced in sufficient quantities to meet domestic demand; certain agricultural products, including beef, tomatoes, and oranges; pharmaceuticals and pharmaceutical ingredients; certain electronics; passenger vehicles, certain light trucks, certain medium and heavy-duty vehicles, buses, and certain parts of passenger vehicles, light trucks, heavy-duty vehicles, and buses and certain aerospace products.

‘Fools and lapdogs’

Trump lashed out at the Supreme Court justices who ruled against him, calling them "fools and lapdogs”.

“The Supreme Court's ruling on tariffs is deeply disappointing, and I'm ashamed of certain members of the Court, absolutely ashamed for not having the courage to do what's right for our country,” Trump said in a news conference at the White House on Friday (February 20), just hours after the verdict came in.

‘India deal is on’

When asked whether the framework for an interim agreement on trade with India, expected to be signed soon, stands in the wake of the Supreme Court ruling, Trump said “nothing changes”.

“Nothing changes. They'll be paying tariffs, and we will not be paying tariffs. So, deal with India is they pay tariffs. This is a reversal for what it used to be, as you know. I think Prime Minister Modi is a great gentleman, a great man, actually, but he was much smarter than the people that he was against in terms of the United States, he was ripping us off. So, we made a deal with India. It's a fair deal now, and we are not paying tariffs to them, and they are paying tariffs. We did a little flip,” Trump said.

Also Read: Why SC Court order is not the end of Trump's tariffs push? Expert decodes

“The India deal is on…all the deals are on, we're just going to do it in a different way,” Trump said.

To another question on his relationship with India, he said, “I think my relationship with India is fantastic and we're doing trade with India. India pulled out of Russia. India was getting its oil from Russia. And they pulled way back at my request, because we want to settle that horrible war where 25,000 people are dying every month,” Trump said.

He said his relationship with Prime Minister Modi “is, I would say, great”.

‘I stopped India-Pak war’

Trump then went on to repeat the claim that he stopped the war between India and Pakistan using tariffs.

“I also stopped the war between India and Pakistan. As you know, 10 planes were shot down. That war was probably going nuclear. And just yesterday, the prime minister of Pakistan said President Trump saved 35 million lives by getting them to stop,” Trump said.

“And I did it largely with tariffs. I said, ‘Look, you're going to fight, that's fine, but you're not going to do business with the United States, and you're going to pay a 200 per cent tariff, each country’. And they called up and they said, ‘we have made peace’,” Trump said.

Also Read: No change in trade deal with India; it is on: Trump after SC verdict

In his remarks at the press conference, Trump said he used tariffs to end the war between India and Pakistan, as he lashed out at the Supreme Court for its decision to strike down his sweeping tariffs imposed on countries around the world.

“Tariffs have likewise been used to end five of the eight wars that I settled. I settled eight wars, whether you like it or not, including India, Pakistan, big ones, nuclear, could have been nuclear,” Trump said.

(With agency inputs)