US Considers Refunding India for Tariff Penalties on Russian Oil Imports
The administration of former President Donald Trump is reportedly evaluating the possibility of refunding India for relatively small penalty amounts collected in connection with the 25% tariff imposed on imports of Russian crude oil. This potential refund would specifically apply to cases where shipments arrived after February 7, the date when President Trump's executive order eliminating the additional duty on such Indian imports took effect.
Scope and Uncertainty of the Potential Refund
The precise scale of any refund remains unclear at this stage. According to a source familiar with the discussions, the refund would be limited to a select number of transactions where tariffs might have been collected before the order became officially effective, even though the actual imports occurred after midnight Eastern Standard Time on February 7. This approach is being viewed as a transitional measure rather than a sweeping policy revision.
Ajay Sahai, the Director General of the Federation of Indian Export Organisations, highlighted that the executive order which removed the additional tariff includes provisions allowing for refunds of duties collected while the higher levy was active. However, he cautioned that the comprehensive legal and procedural framework for claiming these refunds has not been fully detailed, leading to concerns among exporters regarding the process and expected timelines.
Interim Trade Framework and Broader Agreement
This development follows the announcement on Saturday of an interim trade framework between India and the United States, which successfully reduced tariffs on Indian exports to the US down to 18%. The arrangement is designed to facilitate progress toward a comprehensive bilateral trade agreement. The interim deal specifically addresses tariff reductions and non-tariff barriers, while a future, legally binding agreement is anticipated to encompass goods, supply chains, and digital trade.
Separately, through another executive order, the United States officially scrapped the additional 25% tariffs imposed on India for purchases of Russian oil from February 7 onward. The order also stated that the US would continue to monitor whether India resumes direct or indirect imports of Russian crude. In the executive order issued on February 6, the Trump administration specified that Indian goods entering the US for consumption, or released from warehouses for consumption, at or after 12:01 a.m. Eastern Standard Time on February 7, 2026, would no longer be subject to the previously imposed additional 25% ad valorem duty.
Procedural Details and Future Provisions
The order further clarified that if its implementation results in duties having been collected that require return, such refunds would be managed in accordance with applicable laws and the standard procedures followed by US Customs and Border Protection. The reciprocal tariff rate is expected to be formally lowered to 18% from 25% once a related executive order is officially issued by the US government.
Another individual with knowledge of the matter emphasized that the executive order does not suggest any retrospective application. They added that the final trade agreement is likely to incorporate provisions for dispute resolution at a later stage. A trade expert elaborated that the withdrawal of duties applies only prospectively, covering Indian goods entering the United States from 12:01 a.m. EST on February 7 onward. In specific instances where duties were imposed even after the order took effect, those amounts may qualify for refund to the importers involved.
