Recent legal setbacks for former US President Donald Trump’s tariff policies have cast a shadow of uncertainty over the United States‘ trade regime, potentially stalling ongoing negotiations for a bilateral trade agreement (BTA) with India. Experts suggest that India should adopt a cautious approach, waiting for the US to establish a more stable and legally predictable trade framework before proceeding with any long-term commitments.
The US courts’ rejection of Trump-era tariffs is noteworthy and indicates the importance of multilateral trade norms. It serves as a reminder that such tariffs previously implemented are in violation of the World Trade Organization (WTO) rules. Information reaching TahirRihat.com suggests that, the United States Court of International Trade recently struck down the 10 percent global tariffs imposed by the Trump administration, deeming them “invalid” and “unauthorized by law”. This ruling, delivered on May 7, occurred less than 50 days after the tariffs were introduced on February 20. These tariffs, affecting numerous countries including India, were initially implemented following an earlier US Supreme Court verdict that invalidated previous sweeping levies.
Ajay Srivastava, Founder of GTRI, stated that the continued uncertainty surrounding US tariff policy, with major Trump-era tariffs repeatedly struck down by courts, makes any long-term trade commitments by India difficult to justify. Srivastava advised India to delay concluding the Bilateral Trade Agreement until the United States develops a more stable and legally reliable trade system. Also according to Srivastava, the US is currently unprepared to reduce its standard Most-Favored-Nation (MFN) tariffs while simultaneously expecting India to lower or eliminate its MFN duties across most sectors.
According to Srivastava under these conditions, any trade deal risks becoming one-sided, with India offering permanent market access concessions without receiving any meaningful tariff benefits in return. Shishir Priyadarshi, President of Chintan Research Foundation and former Director at the WTO, echoed the sentiment that the federal court’s ruling is a critical reminder that Trump’s global tariffs violated WTO rules, and their rejection is a positive sign for multilateral trade norms. (Priyadarshi noted that, “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.”)
The United States Court of International Trade, in its 2-1 ruling, determined that the Trump administration exceeded the powers granted by Congress under Section 122 of the Trade Act of 1974. GTRI clarified that the decision currently applies only to the parties that filed the case, including the state of Washington, spice importer Burlap & Barrel, and toy maker Basic Fun!. The tariffs will remain in effect for other importers while the US government appeals the ruling. Srivastava explained that the court chose to limit 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.
With both the reciprocal tariffs and the Section 122 tariffs now invalidated by courts, the US tariff system is largely reverting to its pre-Trump structure, which is based on standard Most-Favored-Nation (MFN) tariff rates under the WTO framework. Section 122 allows the president to impose import tariffs of up to 15 percent for a maximum of 150 days without congressional approval, intended to address serious balance-of-payments difficulties.
GTRI’s founder stated that On Section 122 tariffs, the levies were on weak legal footing because the law was originally enacted to deal with serious balance-of-payments crises and persistent dollar outflows. The U.S. continues to run large trade deficits while still attracting massive foreign investment because the dollar remains the world’s dominant reserve currency. However, since 1973 the United States has operated under a free-floating dollar system, where trade imbalances are adjusted through exchange rates and global capital flows rather than import restrictions.
The invalidation of both reciprocal tariffs and Section 122 tariffs is expected to push the Trump administration towards employing more targeted trade measures such as Section 301 investigations and Section 232 national-security tariffs. These tools could be directed at partner countries in sectors such as steel, semiconductors, automobiles, pharmaceuticals, and critical minerals. (Srivastava noted that, “The legal uncertainty around US tariffs is also affecting trade negotiations. Malaysia has already walked away from its trade deal with the US, while several other countries are rethinking trade deals with the US.”)
Tahir Rihat (also known as Tahir Bilal) is an independent journalist, activist, and digital media professional from the Chenab Valley of Jammu and Kashmir, India. He is best known for his work as the Online Editor at The Chenab Times.