How should India negotiate US trade deal after SC ruling?:Expert weighs in on what options Modi govt has now

In a significant blow to the US administration’s trade policies, the country’s Supreme Court has ruled against President Trump’s ability to impose widespread tariffs on imports. This decision, made on 20 February , 2026, effectively curtails the president’s power to unilaterally set tariffs without explicit approval from Congress. The court’s ruling specifically addressed the use of the International Emergency Economic Powers Act (IEEPA) of 1977, which the administration had been using to justify imposing “reciprocal tariffs” on various countries. Chief Justice John Roberts, writing for the majority, stated that the IEEPA was not intended to grant the president such broad authority over trade matters. This decision reaffirms the traditional role of Congress in shaping trade policy and limits the executive branch’s ability to use emergency powers as a shortcut to imposing tariffs. New 15% Tariff: A Quick Response Just hours after the Supreme Court’s ruling, the Trump administration announced a new, temporary 10% tariff (now increased to 15%) on most goods entering the United States. This new tariff, set to take effect on 24 February , 2026, is intended to last for 150 days. The administration is justifying this tariff under Section 122 of the Trade Act of 1974, a law that hasn’t been used in decades. According to the think tank, the GTRI’s Ajay Srivastava, this move signals the administration’s determination to maintain leverage in trade negotiations, but it also introduces a new layer of uncertainty. Legal experts are already questioning the validity of using Section 122 in this context, suggesting that it could face legal challenges. Impact on Global Trade Deals The Supreme Court’s decision and the subsequent 10% tariff have significant implications for global trade relationships. The court ruling specifically eliminates the country-specific “reciprocal tariffs” and duties related to fentanyl that had been imposed on major U.S. trading partners. More broadly, it throws into question the value of recent trade agreements that the US has negotiated with countries like the UK, Japan, the EU, Malaysia, Indonesia, Vietnam, and India. These agreements were often made with the understanding that they would help these countries avoid higher U.S. tariffs. Now that a 10% tariff is in place for everyone, these countries may wonder if those deals are still worth it. Some countries might be tempted to abandon these agreements, seeing them as less beneficial. However, they might hesitate to do so, fearing retaliation from the Trump administration or the possibility of future tariffs or sanctions if relations sour. What This Means for India’s Trade Strategy? According to Srivastava, for India, these developments present a complex situation. Tariff Relief: The removal of the “reciprocal tariffs” will free up about 55% of India’s exports to the United States from the previous 25% duty (or the proposed 18% rate). These exports will now be subject only to the standard, lower “Most Favored Nation” (MFN) tariffs. Ongoing Tariffs: However, some tariffs will remain in place. Tariffs imposed under Section 232, such as the 50% tariff on steel and aluminum and the 25% tariff on certain auto components, will continue. Exempt Products: Products accounting for roughly 40% of India’s export value, including smartphones, petroleum products, and medicines, will remain exempt from U.S. tariffs. Rethinking the Trade Deal: The current situation should prompt India to carefully re-evaluate its ongoing trade negotiations with the United States. India had offered various concessions, such as reducing MFN tariffs, aligning economic policies with U.S. interests, easing regulations on U.S. goods, and signaling large purchases of U.S. products, in exchange for a lower 18% reciprocal tariff rate. Now that a 10% tariff applies to most countries regardless of a trade deal, the value of those concessions needs to be reassessed. India’s Options Moving Forward A joint statement between the U.S. and India on February 6, 2026, included a clause stating that if either country changes its agreed-upon tariffs, the other country can modify its commitments. India should now use this clause to its advantage. It could choose to: Limited Options for the US administration Even with the Supreme Court’s ruling, the U.S. administration still has some options for imposing tariffs, but they are more limited and challenging: Section 122 of the Trade Act of 1974: This allows temporary tariffs to address serious balance-of-payments deficits. However, it has never been used and is likely to face legal challenges. The 10% tariff announced on February 20, 2026, is based on this section, putting it on shaky legal ground. Section 338 of the Tariff Act of 1930: This permits retaliatory tariffs if foreign countries discriminate against US exports, but it requires strong proof and has never been used in modern practice. Section 232 of the Trade Expansion Act of 1962: This allows import restrictions on national security grounds (used for steel and aluminum). Section 301 of the Trade Act of 1974: This targets unfair trade practices but requires lengthy investigations before tariffs can be imposed. A History of Tariff Disputes The current situation is rooted in President Trump’s decision in April 2025 to declare America’s trade deficit a “national emergency” and impose tariffs on imports. These tariffs were initially set at 10% but were later raised to as high as 50% on certain countries. The administration argued that these tariffs were necessary to protect the U.S. industrial base, but critics called the justification unprecedented. The IEEPA, which the administration initially used to justify the tariffs, was originally intended to restrict financial transactions with hostile foreign powers, not to impose general tariffs. Uncertainty and the Need for Recalibration In conclusion, the Supreme Court’s ruling and the subsequent 10% tariff (which now stands at 15%) have created significant uncertainty in global trade relations. Countries that made concessions to avoid higher U.S. tariffs now need to reassess the value of those agreements. For India, this means carefully considering its negotiating position and potentially seeking a better deal with the United States. The future of U.S. trade policy is now less predictable and more subject to congressional oversight.