Will US have to refund Rs 15 lakh crore in tariffs? Section 301 probe begins Friday

The United States will start an investigation into imports from 16 countries, including India, under Section 301 from Friday, amid fresh data pointing to mixed economic effects of tariffs on the US economy.

The investigation process is scheduled to begin on March 17. All stakeholders have been given time till April 15 to submit their responses. The first round of hearings will be held between May 5 and May 8, according to details available.

What triggers Section 301 action

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Section 301 is applied when a foreign country adopts practices that are considered unfair and restrict US trade. These include measures such as unfair tariffs, intellectual property theft, forced technology transfer, and discriminatory regulations.

The probe can be initiated by the United States Trade Representative (USTR) on its own or following a petition filed by companies or industry groups.

Price impact and tariff rates rise

The move comes at a time when a recent report by The Budget Lab at Yale has reviewed the impact of tariffs on the US economy, based on data available up to early April 2026.

“Overall, there is evidence, consistent with economic theory, that tariffs have raised both additional revenue and led to higher prices,” the report said.

According to the report, tariffs imposed in 2025 have generated an estimated USD 214.7 billion (approx. Rs 20 lakh crore) in inflation-adjusted customs revenue above the average seen during 2022–2024, as of February 2026. However, the report noted that a recent Supreme Court ruling may lead to a large portion of this amount being returned.

It said nearly USD 165 billion (approx. Rs 15.5 lakh crore) in duties collected under certain tariff provisions could be refunded to importers, following a court decision that limited the use of specific emergency powers to impose tariffs. This would reduce the net revenue gains from tariffs to around USD 49.7 billion through February 2026.

Tariff rates rise over past year

The report also highlighted that tariff rates have increased significantly over the past year. The effective tariff rate reached 10.6 per cent in January 2026 and stood at around 11.1 per cent as of early April, based on import-weighted calculations.

Prices see pass-through impact

Higher tariffs have also translated into increased prices for consumers, particularly for imported goods. The report said prices of imported core goods and durable goods rose by around 1.5 per cent during 2025 through January 2026, which is higher than the previous year's trends.

It added that the extent to which tariffs are passed on to consumers varies, but estimates suggest that around 46 to 86 per cent of tariff costs have been reflected in core goods prices, while the pass-through for durable goods ranges between 51 and 115 per cent, depending on the method used.

Limited impact on jobs, outlook uncertain

On the employment front, the report said there is no clear evidence so far of a significant impact on the overall labour market. However, it noted that industries more exposed to tariffs have shown some signs of weakness compared to trends seen before 2025.

The report said its findings are based on available economic indicators and are not a direct measure of the causal impact of tariffs. It added that multiple factors are affecting the economy at the same time, making it difficult to isolate the exact effect of tariff measures.

It also noted that most of the data reflect economic conditions before the Supreme Court decision in February 2026 that struck down certain tariff actions under emergency powers. As a result, the full impact of recent policy changes is yet to be reflected in the data.

The report said tariff revenues depend on both the level of duties and the volume of imports, and higher tariff rates can lead to increased revenue if imports are not significantly reduced.

It added that while tariffs have contributed to higher government revenues and rising prices, their broader impact on trade, growth, and employment remains uncertain at this stage.