US Tariff Refund: India’s $12 Billion Gain Hinges on Case-to-Case Negotiations

The United States has started the process for refunding reciprocal tariffs from April 20 through a new online system, CAPE or Consolidated Administration and Processing of Entries. The system is run by the US Customs and Border Protection.

The refunds follow a February 20 ruling by the US Supreme Court, which said President Donald Trump’s tariffs were illegal as they were imposed under the International Emergency Economic Powers Act, or IEEPA, without proper legal authority.

These tariffs, imposed from April 2, 2025, affected export of many Indian products. The total refund is about $166 billion, with roughly $12 billion linked to goods from India.

To get refunds, US importers must file detailed claims with shipment data, tariff lines and proof of payment. Approved claims, with interest, are expected within 60–90 days. Only those who paid the tariffs—mainly US importers and companies—can claim refunds. 
Exporters and consumers cannot claim directly, though some firms like FedEx may choose to share refunds voluntarily.

The reciprocal tariff regime began at 10% on April 2, 2025 and was rapidly escalated. Rates for India rose to 25% by August 7, 2025 and to 50% by August 28, 2025 remaining at that level until early February 2026.

On February 6, tariffs were reduced to 18% following negotiations. But before this could fully take effect, the Supreme Court ruling on February 20 invalidated the entire framework, making the tariffs legally void and triggering refunds.

India’s Exposure
About 53% of India’s exports to the US, mainly textiles and apparel, faced these high tariffs, making them the biggest contributors to refunds. Of the estimated $12 billion linked to India, textiles and apparel may account for about $4 billion, engineering goods another $4 billion, and chemicals about $2 billion, with smaller shares from other sectors.

Still, Indian exporters will not get refunds automatically. Payments go only to US importers, and exporters have no legal right to claim them. Indian exporters, therefore, have no direct legal route to claim refunds.

Any recovery will depend on commercial negotiation. For this, Indian exporters should proactively engage US buyers to seek a share of refunded duties, especially where earlier contracts were priced on a duty-paid basis.

To benefit, Indian exporters must negotiate with U.S. buyers. They should seek a share of refunds where earlier prices included tariff costs. This can be done by reopening contracts, adding rebate-sharing clauses, asking for price revisions or credit notes, and using invoices and tariff data to show how costs were absorbed. Exporters with stronger bargaining power, especially in textiles and engineering goods, may secure better terms in future orders.

They can also take help from bodies like the Apparel Export Promotion Council, Engineering Export Promotion Council of India and Chemexcil for guidance on renegotiating contracts and sector-specific strategies.