Washington Cuts India’s Tariff to 10% — Reshuffling Asia’s Export Pecking Order

A fast-moving sequence of US trade rulings has left India’s tariff position with Washington genuinely unsettled, with real consequences for how global buyers split sourcing across Asia’s competing manufacturing hubs.

Under a US-India interim trade agreement announced in February 2026, India’s reciprocal tariff fell from 25 percent to 18 percent, effective 7 February. That rate was then replaced by a 10 percent tariff under Section 122 of the Trade Act, following further talks later that month. By mid-June 2026, US imports from India carried an effective tariff of roughly 10 percent, putting India close to most other major Asian exporters, who typically face rates of 15 to 19 percent under the broader tariff regime the Trump administration has imposed.

The legal ground under that 10 percent rate is shaky. In May 2026, the US Court of International Trade ruled the Section 122 tariff unlawful. A Federal Circuit stay has kept it in force pending appeal, but that stay is due to expire around 24 July 2026 unless a court extends it, meaning the rate businesses are planning around now could change again within weeks.

The stakes for Indian exporters are real. Engineering goods, electronics, textiles, gems and jewellery, and pharmaceuticals had already started seeing faster order flow on the back of the lower tariff, which restored India’s price competitiveness against Vietnam, Malaysia, Indonesia, and the other Southeast Asian destinations buyers have shifted toward since 2018.

For procurement and sourcing teams, the point is less about India’s exact rate and more about how unstable it is. A sourcing plan built around a steady 10 percent could look very different if the Federal Circuit lets the underlying legal challenge stand, pushing India back to a higher rate or forcing a fresh round of negotiation. Companies with meaningful India exposure should treat the current rate as provisional and build flexibility into sourcing contracts.

This is a pattern Asia-based businesses have lived through repeatedly since 2018: US trade policy toward the region keeps getting litigated and renegotiated in real time, on a timeline of months rather than years. India’s position right now, competitive but legally contested, is just the latest version of that.

In summary: India’s US tariff has fallen to roughly 10 percent after a February 2026 interim deal, restoring its competitiveness against Vietnam, Malaysia, and Indonesia. But a May 2026 court ruling against the tariff mechanism means the rate could shift again as early as late July. Businesses sourcing from South Asia should treat the current rate as provisional, not settled.