Repeated setbacks faced by US President Donald Trump in American courts have further heightened uncertainty over the US tariff regime, and India should wait for the United States to evolve a more stable and legally predictable trade framework before moving ahead with the proposed bilateral trade agreement, experts said.
The United States Court of International Trade, in a 2-1 ruling on May 7, said the Trump administration had gone beyond the powers given by Congress under Section 122 of the Trade Act of 1974 while imposing 10 per cent tariffs. It was struck down less than 50 days after they were introduced on February 20.
They said that this ruling is a crucial reminder that Trump’s global tariffs violated WTO (World Trade Organisation) rules, and their striking down by US courts is a positive signal for multilateral trade norms. In another setback to the White House, a US federal court has struck down the 10 per cent global tariffs slapped by Trump, terming them “invalid and unauthorised by law”.
These new tariffs were imposed by Trump on all countries, including India, on February 24 for 150 days following an earlier US Supreme Court verdict that struck down his earlier sweeping levies. “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,” think GTRI Founder Ajay Srivastava said.
He said that India should wait until the United States develops a more stable and legally reliable trade system before concluding the Bilateral Trade Agreement. “At present, the US is also not prepared to reduce its standard Most-Favoured-Nation (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.
According to the GTRI, the latest US court decision currently applies only to the parties that filed the case, the state of Washington, spice importer Burlap & Barrel, and toymaker 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 Most-Favoured-Nation (MFN) tariff rates under the WTO framework. Section 122 allows the president to impose import tariffs of up to 15 per cent for a maximum of 150 days without congressional approval to deal with serious balance-of-payments difficulties.
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