The landscape of Indo-US trade, as we know it, has been radically redrawn in just 72 hours. For India, this "tariff reset" is a moment of strategic opportunity, as Dinesh Kanabar, CEO of Dhruva Advisors, has highlighted a "silver lining" for key Indian sectors following the latest US tariff maneuvers.
While the US administration moves toward a 15% reciprocal tariff framework, Kanabar notes that Pharma, Electronics, and Energy remain largely insulated, as current tariff structures do not apply to these critical sectors.
On Feb 21, 2026, the US Supreme Court struck down the administration's sweeping "reciprocal tariffs," ruling that the executive branch overstepped its authority by using emergency powers to bypass Congress. This landmark decision not only invalidated billions in duties but also left the US Treasury facing a staggering $160 billion refund liability. In a swift counter-maneuver to preserve his trade agenda, President Trump invoked Section 122 of the Trade Act of 1974, initially proposing a 10% surcharge before escalating it to a 15% global tariff on Feb 22.
The Section 122 Hurdle: A Temporary Measure?
The proposed 15% tariff, initiated under Section 122, is far from a permanent fixture. Legally, Kanabar says, this "temporary import surcharge" is capped at 150 days, meaning it is set to expire by July 24, 2026, unless Congress explicitly intervenes.
Kanabar suggests the move is "legally vulnerable," as Section 122 has rarely been tested in modern courts. Unlike previous executive actions, this path requires a Congressional vote for extension, introducing a level of legislative oversight that could stall long-term implementation.
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India's Strategic Advantage
Despite the global headlines, India's negotiating position has arguably strengthened. Key takeaways, as per Kanabar, for Indian industry include:
Lower Effective Rates: India's effective tariff rate has actually trended downward compared to the peak 50% "punitive" rates seen in 2025.
Pharma & Tech Exemption: Pharmaceutical and energy exports remain exempt without requiring a specific trade-off agreement, protecting India's massive generic drug and green energy markets.
Predictability: The shift from unilateral executive orders to a Congressional process offers businesses a more stable horizon for long-term planning.
The $160 Billion Legal Blowback
The pivot to Section 122 follows the Supreme Court ruling that declared previous tariffs-collected under the International Emergency Economic Powers Act (IEEPA)-illegal.
Kananbar says the ruling has triggered a fiscal crisis for the US Treasury, with over $160 billion in "illegally collected" tariffs now subject to potential refund claims. This massive liability marks the end of an era where the US President could impose sweeping tariffs via executive decree. Moving forward, the administration must rely on Congressional backing or specific Section 301 investigations-which India must watch closely-to justify future trade barriers.
For Indian exporters, Kanabar suggests, this reset provides a vital window to scale US market share while the American trade policy apparatus remains entangled in legal and fiscal cleanup.
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