The US Customs and Border Protection (CBP) has declared that it will end the 25% extra ad valorem tax that used to apply to Indian goods.
The administration implemented this order because President Donald Trump signed an executive order that established new trade policies between Washington and New Delhi. The directive will take effect for all products that enter the market or exit storage starting from 12:01 a.m. on February 7, 2026.
The directive will eliminate all financial penalties that existed during the most intense periods of international conflict over energy resource acquisition.
Strategic Alignment
The United States government established new trade regulations, which allowed India to show its dedication for developing diverse energy resources through Western energy sources instead of Russian oil.
The “Strategic Alignment” receives additional support through the establishment of a new defense cooperation agreement, which will last for 10 years.
The trade environment now operates with an 18 percent reciprocal tariff system because the 25 percent penalty has been eliminated, whereas the former system imposed higher tariffs that reached nearly 50 percent on particular industries, including textiles, leather, and organic chemicals.
Economic Reciprocity
The main foundation of this transition process depends on economic reciprocity, which Executive Order 14257 describes. The interim agreement enables India to reduce or remove import taxes for all American industrial and agricultural products, which cover tree nuts, fresh fruits, and technology hardware.
Washington established a route that allows zero-duty access to essential Indian industries, including generic pharmaceuticals and gems, after both nations complete their Comprehensive Bilateral Trade Agreement negotiations.
The established reduction process removes the 25% punitive surcharge while maintaining a fair trade system that handles ongoing goods trade imbalances between the two countries.
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