India is closely examining the latest developments in the United States’ tariff policy following a significant ruling by the U.S. Supreme Court and a subsequent announcement by former U.S. President Donald Trump introducing a fresh temporary import duty.

The Commerce and Industry Ministry has confirmed that it has “noted” the Supreme Court’s judgement striking down reciprocal tariffs but is still studying the broader implications. The Ministry has not yet clarified what these developments mean for the proposed India-U.S. Interim Trade Agreement, which remains unsigned.

The situation reflects continuing uncertainty in bilateral trade relations between the two countries.

Supreme Court Strikes Down Reciprocal Tariffs

On February 20, the Supreme Court of the United States ruled that the reciprocal tariffs imposed by Donald Trump under the International Emergency Economic Powers Act (IEEPA) exceeded presidential authority.

The Court held that invoking emergency economic powers to impose tariffs on multiple countries, including India, did not fall within the scope of the law.

As a result, the reciprocal tariffs were struck down.

For India, this ruling initially appeared to offer relief, especially for exporters affected by higher duties introduced during the earlier phase of trade tensions.

Trade analysts described the verdict as a major legal development that limits executive power in imposing sweeping tariffs without Congressional approval.

However, the relief turned out to be short-lived.

Fresh 10 Percent Baseline Tariff Announced

Soon after the ruling, Donald Trump announced that the United States would impose a temporary 150-day 10 percent baseline tariff on all imports starting February 24.

This tariff has been introduced under Section 122 of the Trade Act of 1974.

According to a factsheet issued by the White House, Section 122 allows the President to address certain fundamental international payment problems through surcharges and other special import restrictions.

In simple terms, the provision gives the President authority to impose temporary measures when the U.S. faces significant balance-of-payments issues.

The move effectively replaces the earlier reciprocal tariff regime with a new temporary baseline duty applicable across imports.

For Indian exporters, this means that while one set of tariffs has been removed, another broad-based duty has taken its place.

Commerce Ministry’s Response

The Commerce and Industry Ministry of India has stated that it has carefully noted the Supreme Court’s judgement and is examining the fresh tariff announcement.

Officials have indicated that the government is assessing:

• The legal basis of the new tariff

• Its potential impact on Indian exports

• The broader implications for bilateral trade

• The status of the pending Interim Trade Agreement

However, the Ministry has not yet issued a detailed statement clarifying India’s next course of action.

Trade experts say that the government is likely to adopt a cautious approach, given the fluid nature of U.S. trade policy.

Existing Tariffs Still in Place

Even before the new 10 percent baseline tariff, several other U.S. duties remained in force.

These include tariffs on:

• Steel

• Aluminium

• Certain categories of manufactured goods

• Items below the earlier 800 dollar de minimis threshold

The Supreme Court ruling did not affect these sector-specific tariffs, which were introduced under different legal provisions.

As a result, Indian exporters continue to face multiple layers of duties in the U.S. market.

Impact on Indian Export Sectors

The combined effect of old and new tariffs creates challenges across several sectors.

Steel and Aluminium

The U.S. tariffs on steel and aluminium have significantly affected Indian metal exporters. Higher duties reduce price competitiveness and make Indian products costlier in the American market.

Industry bodies have repeatedly called for resolution through diplomatic channels.

Engineering Goods and Auto Components

Engineering exports, including machinery and auto components, may face increased costs under the 10 percent baseline tariff.

Long-term contracts with U.S. buyers could be affected if pricing structures change.

Textiles and Small Businesses

Small exporters selling low-value goods through e-commerce platforms are particularly vulnerable.

The additional tariff layer may increase final product prices and reduce demand.

Interim Trade Agreement in Question

One of the key uncertainties revolves around the proposed India-U.S. Interim Trade Agreement.

The agreement was expected to address tariff disputes and improve market access for Indian products.

However, with fresh tariff measures being introduced, questions arise about:

• Whether negotiations will accelerate

• Whether the agreement will incorporate the new baseline duty

• Whether the agreement will offer exemptions for certain sectors

Trade analysts believe that clarity on the agreement is crucial for restoring confidence among exporters.

Legal and Policy Complexity

The shifting tariff framework highlights the complexity of U.S. trade policy.

The Supreme Court ruling underlined the limits of emergency economic powers, but Section 122 provides a separate legal route for imposing temporary tariffs.

This layered legal structure creates uncertainty for trading partners.

For India, navigating this evolving landscape requires both diplomatic engagement and domestic policy support for affected industries.

Broader Trade Relations

India and the United States share a significant trade partnership.

The U.S. is one of India’s largest export destinations, covering sectors such as:

• Pharmaceuticals

• IT services

• Textiles

• Engineering goods

• Gems and jewellery

While services trade remains largely unaffected by goods tariffs, merchandise exports are directly impacted.

The introduction of a universal 10 percent tariff could influence overall export volumes if it remains in place for the full 150-day period.

Global Reactions

Other countries affected by the baseline tariff are also studying its implications.

Trade analysts note that a uniform tariff applied to all imports may trigger concerns at the World Trade Organization.

Some experts argue that such measures could increase global trade tensions if extended beyond the temporary period.

Economic Implications for India

The immediate economic impact on India will depend on:

• The duration of the tariff

• Whether exemptions are granted

• How global demand responds

• Currency movements

If the rupee weakens against the dollar, it may partially offset tariff costs by making Indian exports relatively cheaper.

However, sustained tariff pressure could reduce margins for exporters.

Government Strategy Going Forward

The Indian government is expected to:

• Engage diplomatically with U.S. authorities

• Monitor sector-wise export impact

• Explore alternative markets

• Provide support to vulnerable industries

Export promotion schemes and trade facilitation measures may be strengthened if required.

The Commerce Ministry’s cautious response indicates that it is evaluating all legal and economic aspects before making a formal announcement.

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