US Supreme Court Ruling on Trump's Import Tariffs Sparks Global Trade Uncertainty

After the legal setback from the Supreme Court of the United States for the Donald Trump administration late Friday, a flood of mixed reactions has ensued in global trade circles. While Trump himself has termed the top court ruling a “disgrace”, trade experts are calling it an obvious interpretation of the International Emergency Economic Powers Act (IEEPA), under which the sweeping import tariffs were imposed by the president. As the dust settles, it can be seen that the apex court ruling has made the matter more confusing rather than bringing clarity. For India, the latest ruling may prove to be a reason to further delay the implementation of the trade deal. The Trump administration had initially imposed a reciprocal tariff of 50% on about 55% of Indian imports. The tax was later eased to 25% after India assured the US of lowering its crude imports from Russia. Under the India-US bilateral trade agreement, the current 25% import tax on goods was to be further lowered to 18%. However, this tax will now be reduced back to the MFN (Most Favoured Nation) level. According to a report by Moneycontrol, the average tax under the MFN framework ranged between 2.8% and 3.3%. Hence, the ruling has put a question mark on the future of the India-US trade deal. While the broad contours of the deal have been announced, the official agreement is yet to be signed. From here, there can be two possibilities: either the Trump government finds another way to impose tariffs or it accepts the court decision. According to a report by The Indian Express, various provisions under the Trade Act (1974), Tariff Act (1930), and Trade Expansion Act (1962) allow the US government to impose taxes on imports. However, if Trump decides not to act against the verdict, Indian and American officials engaged in finalising the trade deal may need to relook at various provisions. “This (the verdict) could undermine recent US trade deals with the UK, Japan, EU, Malaysia, Indonesia, Vietnam, and India. Partner countries may now reconsider — or even abandon — agreements negotiated under tariff pressure,” said Ajay Srivastava, Founder, Global Trade Research Initiative, in a LinkedIn post after the verdict came. According to Srivastava, this ruling must prompt a review of India’s trade deal with the United States. “Reciprocal tariffs were the US leverage. With that leverage gone, the negotiations become useless.”