India's US Tariff Saga Isn't Over, and That's Exactly the Point About Resilience

An Indian exporter selling into the US has had to plan around a 25 percent reciprocal tariff, then, for many affected sectors, an additional Russia-linked duty that took the combined additional tariff to 50 percent, then an 18 percent framework announced in February 2026 with that Russia-linked duty removed, then a temporary 10 percent surcharge under an entirely different legal authority after the courts struck down the regime the 18 percent rate depended on. As of this writing, a further 10 percent duty tied to a separate forced-labour investigation has been layered on top of some of this.

The exact numbers matter less than what most trackers miss: exporters weren't just living through changing tariff rates. They were living through changing legal mechanisms, each with its own durability, exemptions, and expiry conditions. That's not policy stability that happened to land somewhere tolerable. That's volatility, and it isn't obviously finished.

Why the mechanism matters more than the number. As a resilience researcher, the detail I find most telling isn't any single rate, it's the shift in legal mechanism underneath the numbers. The 25/50 percent tariffs and the 18 percent framework relied on emergency executive authority (IEEPA) that the US Supreme Court subsequently invalidated. What replaced it, a temporary 10 percent surcharge under Section 122 of the Trade Act of 1974, a balance-of-payments provision capped at 150 days by statute, carries a fundamentally different planning risk than either the invalidated regime or a rate embedded in a negotiated bilateral framework. A tariff set under a time-limited statutory authority and one embedded in a durable trade agreement are not the same kind of risk, even when the headline percentage looks similar.

Among the most exposed sectors were textiles and apparel, gems and jewellery, marine products, and engineering goods. Several of these, especially textiles and apparel, gems and jewellery, and marine products, are highly employment-intensive, and CRISIL has estimated that MSMEs account for more than 70 percent of the textiles, gems and jewellery, and seafood exports affected by these tariffs. This isn't an abstract policy story; it shows up as order cancellations and job losses in industrial clusters that can't simply wait out a few quarters of legal uncertainty.

What resilient firms did differently. The clearest documented example isn't a shift toward Mexico, that framing turned out not to hold up on closer sourcing: Mexico itself raised tariffs on non-FTA countries including India through 2026, and simply routing goods through Mexico doesn't qualify for USMCA treatment without satisfying its rules of origin. The stronger, better-evidenced case is Pearl Global Industries, which was able to redirect US-bound production through its existing facilities in Bangladesh, Indonesia, Vietnam, and Guatemala when the tariff shock hit. Reporting at the time described this prior diversification as paying dividends, with other large exporters looking to follow suit and jewellery firms turning toward West Asia. That is a cleaner demonstration of the resilience principle than any single tariff number: optionality built before the shock is what becomes valuable during the shock.

For MSMEs in these clusters, building or accessing production capacity in Vietnam, Bangladesh, Indonesia, or another export base is far harder than it is for a large exporter with an existing multinational footprint. That gap in diversification capacity became an observable competitive disadvantage, not merely a theoretical risk, smaller exporters unable to shift production bases were among those reported hardest hit.

What this means, roughly a year in: Single-market export concentration remains a visible risk, not a hypothetical one, the US still accounts for roughly a fifth of India's goods exports despite diversification efforts. Policy mechanism matters as much as policy rate: a temporary tariff under a time-limited statutory authority and a rate embedded in a durable trade agreement carry very different planning risk even at an identical headline number. And MSMEs have the greatest need for diversification support while typically having the least capacity to build it alone, a gap that a parliamentary panel has already called for addressing through export credit, insurance, and technical assistance.

For many exporters, the immediate pressure has eased from last year's 50 percent peak, but the policy environment remains unsettled. A strategy built for any single rate, rather than for the volatility and legal uncertainty that produced it, is solving the wrong problem.