U.S. 50% Tariff on Indian Goods Starts Aug 27; Three Exemptions

(AUGUST 27, 2025) The United States has moved ahead with a steep new duty on imports from India, doubling rates to a combined 50% Tariff as of 12:01 a.m. EST on August 27, 2025. But not every shipment will be hit right away. A narrow “in-transit” carveout can delay the cost spike for goods that meet three strict conditions: they must already be on the water before the effective time, be entered for consumption or withdrawn from a U.S. warehouse before a second deadline next month, and be declared under a special code in the U.S. tariff system. The policy comes from a notice by the Department of Homeland Security, implementing Executive Order 14329 signed earlier this month and executed through updates to the U.S. Harmonised Tariff Schedule.

What the policy does and how it’s implemented

Under the policy, U.S. Customs and Border Protection is applying a temporary grace period tied to shipment timing and paperwork, sometimes called a Transit Timing Exception. To qualify:

• Products must have been loaded at the port of origin and already in transit to the United States before the duty start time.
• Importers must enter the goods for consumption or withdraw them from a customs warehouse before the second cutoff of September 17, 2025, at 12:01 a.m. EST.
• Importers must file the proper declaration using the updated tariff programming in the U.S. system, including a special HTSUS chapter for trade remedies (commonly referenced as HTSUS 9903.01.85).

According to analysis by VisaVerge.com, this short window will matter most to shippers whose vessels departed in recent days and are nearing U.S. shores.

Scope and sectors affected

The policy targets a broad list of Indian exports and follows two back-to-back increases of 25% that together reach the new 50% threshold. The administration framed the action as part of a wider strategy tied to energy geopolitics, pointing to India’s continued purchases of Russian crude during the Ukraine war. Indian officials and trade bodies call the action unfair and warn of heavy pressure on exporters.

Sectors that may benefit from the in-transit carveout include:

• Iron and steel, aluminium and copper
• Passenger vehicles and light trucks, auto parts
• Fast-turn electronics (chips, smartphones, tablets)
• Pharmaceuticals (when timing and certification rules are met)

Sectors that remain exposed if deadlines are missed:

• Textiles, leather goods, gems
• Machinery, furniture, marine products

For many companies, arriving a day earlier or later can reshape margins or prices.

The three eligibility conditions (time-stamped and specific)

1. Loaded and in transit before the start
   • Must be loaded at the foreign port and already en route to the U.S. before 12:01 a.m. EST, August 27, 2025.
2. Entry/withdrawal before the second cutoff
   • Must be entered for consumption or withdrawn from a customs warehouse before 12:01 a.m. EST, September 17, 2025.
3. Proper filing and HTSUS coding
   • Declare the correct “in-transit” certification using the updated Harmonised Tariff Schedule (HTSUS) coding; trade guidance references HTSUS 9903.01.85 to flag eligibility.
   • Filing without the proper code can nullify relief even if timing requirements are met.

“Filing without the proper code can nullify the relief even if the shipment meets the timing rules.”
— Trade compliance guidance summarized from DHS/Customs notices.

Origin of the measure and official guidance

These moves flow from the Department of Homeland Security’s implementation of Executive Order 14329, signed on August 6, 2025. The order directs updates to tariff rates under the HTSUS to reflect the new policy. U.S. Customs has circulated operational guidance to ports, brokers, and importers to ensure consistent application.

Importers’ key tasks:

• Verify proof that a shipment left the foreign port before the cutover.
• Ensure the cargo is on its final leg to a U.S. port and not parked or transshipped in a third country.
• Maintain records to prove continuous carriage and timely filing.

Practical documentation and proof

Common documents and evidence to prove eligibility:

• Bills of lading with a clear onboard date
• Export clearance records from the port of loading
• Carrier tracking showing continuous movement toward the U.S.
• Documented through-bills for direct or continuous sailings

Customs brokers recommend compiling a folder per eligible shipment with the onboard date, master and house bills, vessel schedules, carrier certification, and export clearance documents.

Examples illustrating the timing rules

• An Indian steel coil loaded in Mumbai on August 22 and tracked continuously toward New York, arriving September 10, can meet all three tests and avoid the 50% Tariff.
• A mobile phone consignment still in a bonded export warehouse at 12:05 a.m. EST on August 27, loaded later that day, does not meet the first test and would face the higher duty even if it arrives on September 1.
• An auto parts container that reached a U.S. port on August 26 but was placed in bonded warehouse and then withdrawn on September 18 misses the second test and would be charged the new rate at withdrawal.

Entry vs. warehousing: why timing matters

• Entry for consumption: importer files the entry, assessed duty is paid, and cargo clears into U.S. commerce.
• Warehousing: allows postponement of duty, but the carveout applies only if the cargo is withdrawn before September 17, 2025, 12:01 a.m. EST.
• Delaying withdrawal into the day after the cutoff forfeits the carveout even for cargo that initially qualified.

Transshipment and final-leg issues

The in-transit rule emphasizes the final leg toward the U.S. If a container is sitting in a third-country port on August 27 without a through-bill showing continuous carriage, it risks losing eligibility. Carriers and brokers stress careful review of booking terms and bills of lading to show steady route to a U.S. port.

Industry reactions and business adjustments

Industry groups in India warn the duty will ripple through supply chains. Exporters fear price squeezes; some are negotiating who will bear the cost. Actions firms are taking:

• Accelerating vessels already en route
• Speeding entry for consumption to meet the September 17 deadline
• Revisiting contracts to share “landed cost” risk between buyer and seller
• Small retailers and importers with cargo already at sea try to preserve price tags for a few weeks
• Others prepare to pass costs to customers or reduce margins

Large buyers may switch sourcing or negotiate lower factory prices. Small importers may reduce SKUs, increase order sizes, or pair Indian goods with other-origin items to soften average cost increases.

Checklist recommendations from VisaVerge.com and brokers

Three core checklists: timing, paperwork, filing.

1. Timing
   • Confirm vessel onboard date
   • Keep carrier statements and tracking
2. Paperwork
   • Ensure bill of lading shows the correct port of loading
   • Keep export clearance documents from India
3. Filing
   • Align commodity classification with the remedy subchapter
   • Include required certification text and the special code (widely referenced as HTSUS 9903.01.85)
   • Have a second reviewer for entries filed in the next three weeks

Brokers advise rehearsing entry steps before ship arrival and pre-positioning documents to avoid missed deadlines by hours.

Sector-by-sector impacts

• Steel mills: tight cash cycles; a 50% Tariff in a major market is hard to absorb.
• Copper and aluminium suppliers: risk of lost orders if buyers switch sourcing.
• Auto part makers: many are small factories that could face layoffs if demand falls.
• Electronics: some shipments may qualify under the carveout, but future orders could shift; product launch and holiday inventory plans are at risk.
• Pharmaceuticals: rely on predictable costs and fast approvals; surprise duty bills could affect patients and pharmacies.

Approximately 55% of India’s exports to the U.S. fall under the new tariff structure, amplifying risks of cancelled orders, delayed shipments, and price renegotiations.

Geopolitical framing and international response

Policy watchers note the geopolitical backdrop: the U.S. has pressed partners over purchases of Russian energy; India asserts its oil trade reflects national interest and energy security. U.S. officials describe the duty as part of a broader toolkit to push for policy alignment on the Ukraine conflict.

International reactions:

• Indian officials pledge support for exporters (credit, insurance help).
• Negotiators are exploring options to lower the rate or narrow scope.
• Trade partners in Europe and Asia argue higher barriers risk slowing growth.

Quick-reference summary (one page)

• The combined 50% Tariff took effect at 12:01 a.m. EST, August 27, 2025.
• To use the Transit Timing Exception, cargo must be loaded and in transit to the U.S. before that exact time.
• To keep the exemption, the shipment must be entered for consumption or withdrawn from warehouse before 12:01 a.m. EST, September 17, 2025.
• The importer must file the correct certification and HTSUS remedy code—commonly referenced as 9903.01.85—alongside the base classification under the Harmonised Tariff Schedule.

Compliance guidance and practical warnings

• Compliance is the bridge between a near-term reprieve and a high duty bill.
• A late truck, a missing stamp on the bill of lading, or a typo in the HTSUS code can erase the benefit.
• Customs brokers recommend:
  • Rehearsing entry steps before arrival
  • Pre-positioning documents
  • Coordinating with terminals for quick pickup
  • Planning warehouse withdrawals with a cushion for weekends, closures, or weather delays

What comes next

Once the short window closes, the higher duty will test supply chains and political will. Responses may include:

• Large buyers switching sourcing or negotiating lower ex-factory prices
• Smaller importers adjusting SKUs or order patterns
• Exporters in India seeking rebates or tax credits to remain competitive
• Continued diplomatic engagement and potential negotiations to alter the measure

If there is a silver lining, it is clarity: rules are public, deadlines are exact, and documents that prove eligibility are standard shipping paperwork—so companies can act now. For goods already on the water, the next three weeks offer a chance to keep prices stable and fulfill contracts as planned. For later shipments, focus shifts to policy talks and long-term strategy.

For importers needing to verify the tariff text and remedy subchapters, consult the official schedule maintained by the U.S. International Trade Commission at https://hts.usitc.gov. That site shows the legal tariff language, chapter notes, and special programs, and it is updated when new measures take effect.

Final practical note: keep one eye on the vessel’s live position, one eye on the entry clock, and a firm hand on the keyboard when filing under the Harmonised Tariff Schedule.