The United States imposed an additional 10% Section 301 tariff on non-exempt Indian goods from 24 July 2026, a measure New Delhi estimates covers about 55% of India's exports to the US market. For many affected products, the duty replaced an expiring 10% Section 122 surcharge, so landed costs did not rise by a fresh 10 percentage points on day one. The real shift is legal, not arithmetic: the new tariff sits on a more durable statutory footing and could persist far longer than the surcharge it succeeded.

The previous Section 122 surcharge had reached its statutory 150-day limit. The replacement preserves a similar 10% rate but grounds it in Section 301, the authority Washington uses to respond to foreign government practices affecting US commerce. Even where the headline rate did not increase on 24 July, sourcing teams should read the measure as longer-term structural cost, not a temporary surcharge cycle.

The duties apply to covered goods entered for US consumption, or withdrawn from a warehouse for consumption, from 12:01 a.m. Eastern time on 24 July. A narrow transition rule covered qualifying goods already loaded on a vessel and in transit before the deadline, provided they entered before 12:01 a.m. on 28 July.

India landed in the 10% tier rather than the 12.5% tier applied to China, Vietnam and Thailand after it adopted a prohibition on imports produced with forced labour — a step taken after USTR published its proposed action in June. Economies that adopted no such prohibition, made no related trade commitment or put only a partial regime in place generally drew the higher 12.5% rate.

How the 10% Stacks

India does not receive the top-up calculation applied to the European Union, Taiwan, Japan and South Korea. For a covered Indian product, the full 10% is added to its existing US tariff. A product carrying a 6.5% ordinary tariff now faces a combined 16.5% before any other measures apply — and antidumping duties, countervailing duties, earlier Section 301 actions and customs charges may still be added where relevant.

The five top-up economies fare differently. An EU or Taiwanese product with a 6.5% ordinary tariff attracts an additional 3.5%, bringing the two components to a 10% ceiling. Japan and South Korea receive similar treatment up to 12.5%. That treatment does not cap every tariff or charge on a given shipment.

India's government estimates around 45% of its US exports remain outside the action through product-level exclusions or separate tariff treatment. OCBC, using its own analysis of 2025 US import data, puts the exempt share at 54.4% and estimates India's overall effective rate at 8.2% after exemptions — an analytical figure, not the statutory rate. Generic pharmaceuticals and smartphones rank among the principal protected categories, though the precise outcome depends on each product's Harmonized Tariff Schedule classification.

USTR retained exemptions for hundreds of products and added further exclusions after public comments, covering specified pharmaceuticals and ingredients, vaccines, minerals, semiconductor-manufacturing equipment and other goods where additional duties could create shortages or disruption in the US economy. Goods governed by Section 232 actions — steel, aluminium, cars and others — are carved out of this Section 301 layer but keep paying their own Section 232 duties.

Textiles Carry the Competitive Risk

The aggregate numbers understate the sectoral hit. Textiles, garments, footwear, leather goods and other manufactures stay fully exposed to the extra 10%, and these are the trades that run on thin margins.

The sharper threat sits with India's competitors. USTR intends to establish tariff-rate quotas for specified textile and apparel products from Bangladesh, Cambodia, Indonesia and Malaysia. The quotas would be linked to each economy's purchases of US cotton or textile inputs, allowing qualifying shipments within quota volumes to receive reduced Section 301 treatment.

None of those quotas was in force as of 28 July 2026. USTR had not set permitted volumes or announced a start date, and the relevant goods from those economies still face the applicable 10% tariff. Once activated, however, the arrangements could allow competing producers to ship selected clothing and textile goods into the US at lower tariff cost than Indian suppliers — meaning India may avoid the 12.5% tier and still lose relative competitiveness in one of its most employment-intensive export sectors.

The Bilateral Track

India says it remains committed to an early bilateral trade agreement with the US. Discussions include textiles and other sector-specific market-access issues, but no tariff relief under those negotiations had been agreed when the Section 301 measure took effect. India is likely to seek broader product exemptions, concessions for textiles and more predictable US market access; treatment similar to the planned quotas would reduce the risk of orders shifting to Bangladesh, Cambodia, Indonesia or Malaysia.

Any deal would need to separate relief from this Section 301 action and measures under other US trade laws. Reducing one tariff does not automatically eliminate Section 232 duties, antidumping measures or product-specific restrictions.

Three developments will now determine whether the tariff becomes a manageable cost or a deeper competitive problem: whether USTR establishes the four textile TRQs and at what volumes; whether the India-US agreement delivers comparable textile access or wider Indian exemptions; and the outcome of USTR's separate investigation into structural excess capacity in manufacturing sectors, which covers India and could produce measures beyond the 24 July tariff.