India-US Trade Update: 'Most favoured nation' tariff coming soon as 10% levy expires on July 24, say sources

India and the US are set to finalise a trade agreement after the conclusion of the Donald Trump 2.0 administration's Section 301 investigations, sources told Zee Business. Both sides' negotiators are actively engaged in discussions to finalise the deal.

Sources also said that the United States' most favoured nation (MFN) tariff is likely to come into force once the additional 10 per cent tariff expires.

An additional 10 per cent levy, currently in force, is set to expire on July 24.

Ann official said that India is seeking guarantees that the US will not impose new additional tariffs after the trade pact is finalised and signed. India seeks tariff treatment that remains competitive relative to rival manufacturing economies exporting to the American market, noted the official.

The deal aims to reduce tariffs and enhance market access across sectors like agriculture, while addressing domestic sensitivities. Commerce and Industry Minister Piyush Goyal initially targeted a mid-March pact, and then revised it to end-of-July.

Section 301 proceedings and US-India trade deal

Last week, Goyal said that India remains engaged with the US in its Section 301 proceedings and for finalisation of a framework agreement. The nation is also parallelly engaged with the US for finalisation of a framework agreement as was announced on February 2, and in accordance with the joint statement released on February 7.

The ministry noted that the United States Trade Representative (USTR) -- a Cabinet-level agency within the POTUS's Executive Office -- has completed its probe against 60 economies, including India. Section 301 probe enables the agency to study measures undertaken by foreign countries to prevent the import of its goods.

The USTR is the apex American body responsible for developing, coordinating and implementing US international trade policy.

It has proposed imposing additional tariffs on imports from the 60 economies under Section 301 of the 1974 US Trade Act -- a crucial legislation that grants the US president power to negotiate international trade pacts, lower import barriers and counter any foreign trade practices understood to be unfair for the American economy.

Products covered under Section 232 tariffs and certain other products are excluded from these tariff proposals, said the trade ministry. "A special mechanism has also been proposed for textile and apparel products that could allow a certain volume of imports from selected economies to enter the US at lower tariff rates," it noted.

The ministry also stated that the proposed tariffs are not yet final, and the USTR has invited stakeholders to submit requests to participate in public hearings by June 22 or submit comments in writing by July 6.

Public hearings on the matter will be held on July 7, according to the release.

The USTR will consider the comments and testimony received before taking a final decision on the proposed measures, it noted. Read more

What is a Section 301 probe?

Section 301 is a provision under Sections 301-310 of the US Trade Act aimed at securing relief for the US economy from unfair trade practices. It authorises the USTR to investigate whether foreign countries' acts or policies are unjustifiable, unreasonable or discriminatory for the American economy.

It also empowers the US government body to take unilateral retaliatory action to counter these practices, including , including tariffs, import restrictions or the suspension of trade concessions. Upon detecting violations, it can use these powers on behalf of the US government to remove unfair foreign trade practices without Congressional approval.

When did Section 301 probe gain prominence?

It first gained widespread attention during the 2018-2020 US-China trade war, when Washington slapped tariffs on hundreds of billions of dollars worth of Chinese goods.

Rather than focusing primarily on China, the 2026 probe extended scrutiny to allies and major trading partners, reflecting a wider effort to address perceived trade imbalances and industrial policy concerns.