With the Trump Administration’s aggressive tariff policy suffering judicial setbacks for the second time since February, New Delhi may slow down on a bilateral trade agreement (BTA) with the US.
A U.S. Court of International Trade in a 2-1 decision Thursday held that Trump’s latest 10% temporary global tariffs over Most Favoured Nation (MFN) rates are unjustified under a 1970s trade law. It, however, blocked the levies only for two private importers and the State of Washington, offering practically no relief to any other importers or countries.
On February 20, the US Supreme Court struck down Trump’s reciprocal tariffs on nations, after which his administration imposed the 10% uniform additional levy. This is expected to expire in July.
“The continuing uncertainty around US tariff policy, with major Trump-era tariffs repeatedly struck down by courts, makes any long-term trade commitments by India difficult to justify,” thinktank GTRI Founder Ajay Srivastava said. He added that India should wait until the United States develops a more stable and legally reliable trade system before concluding the BTA. “At present, the US is also not prepared to reduce its standard MFN tariffs, while expecting India to lower or eliminate its MFN duties across most sectors. Under such conditions, any trade deal risks becoming one-sided, with India offering permanent market access concessions without receiving any meaningful tariff benefits in return,” Srivastava said.
Shishir Priyadarshi, President, Chintan Research Foundation, former Director, WTO, said that the federal court’s ruling is a crucial reminder that Trump’s global tariffs are in violation to the rules of the violated WTO rules, and their striking down is a positive signal for multilateral trade norms. “However, with the decision held in abeyance, uncertainty lingers. We must remain vigilant, as the US may still seek new avenues to circumvent the ruling,” Priyadarshi said.
India and the US have already agreed on a framework for an interim trade agreement. Both sides are currently working on the text of that agreement. Indian officials led by chief negotiator Darpan Jain were in Washington between April 20 to April 23 to discuss the details of the pact. During the meetings multiple areas such as Market Access, Non-Tariff Measures, Technical Barriers to Trade, Customs and Trade Facilitation, Investment Promotion, Economic Security Alignment and Digital trade were discussed.
The interim deal based on the joint statement was to be finalised by March but the US Supreme Court on February 20 invalidated the reciprocal tariffs, causing the US to look for other laws to keep imposing additional tariffs on its trade partners.
On April 27, Commerce and Industry Minister Piyush Goyal said India will soon sign trade agreements with the US and European Union. “The Free Trade Agreement with New Zealand is the seventh free trade agreement that I am signing in the last three and a half years. Two more to go very soon in the next few months with the European Union and the United States of America,” the minister said at the signing of the India-New Zealand FTA.
In its latest ruling, the US trade court said the Trump administration had gone beyond the powers given by Congress under Section 122 of the Trade Act of 1974. It was struck down less than 50 days after they were introduced on February 20.
The decision currently applies only to the parties that filed the case, the state of Washington, spice importer Burlap & Barrel, and toy maker Basic Fun!. The tariffs will continue for other importers while the US government appeals the ruling. “The court chose not to block the tariffs nationwide at this stage. The court limited relief to the litigants before it rather than issuing a nationwide injunction, a practice sometimes followed by US courts in politically sensitive disputes involving executive authority,” Srivastava said.
With both the reciprocal tariffs and the Section 122 tariffs now invalidated by courts, the US tariff system is largely returning to its pre-Trump structure based on standard MFN tariff rates under the WTO framework.
TOPICSIndia-US trade dealThis article was first uploaded on May eight, twenty twenty-six, at fifty-three minutes past ten in the night.