New Delhi: After the US Supreme Court Friday struck down Donald Trump’s global tariff framework under the country’s five-decade-old International Emergency Economic Powers Act (IEEPA), the president signed another executive order to impose a new temporary 15% universal levy, effective 24 February.
While this has forced several nations, including India, to recalibrate, the 15 percent duty for the 150-day window does come as a breather for Indian exporters, who ship $80 billion worth of goods annually to the US, led by textiles, gems, pharmaceuticals and engineering products.
The 6-3 decision by the Supreme Court deemed the tariffs unconstitutional in peacetime, nullifying the legal basis for the 18 percent reciprocal duties India faced under the unsigned interim trade deal, announced earlier this month.
The new 10 percent import duty overrides this interim tariff framework for India, under which Trump had slashed reciprocal duties from 25 percent to 18 percent. The White House clarified that all partners, including New Delhi, default to 15 percent for now, pending ways to reinstate “pre-negotiated” higher rates.
Labour-intensive sectors, like apparel and jewellery, thus stand to save millions in duties over the next 150 days.
Manoj Mishra, Partner at Grant Thornton Bharat, told ANI, “The ultimate beneficiary of this would be consumers in the USA…and of course, Indian exporters will get immediate relief. They will not be required to pay that 25 percent reciprocal tariff, which, even with the FTA, would be reduced to only 18 percent. And the punitive tariff on importing Russian oil is already gone.”
In its landmark ruling, however, the US Supreme Court did not deem Section 232 of Trade Expansion Act as unconstitutional, which allows unlimited tariffs on imports threatening national security. Hence, duties on steel, aluminum and auto parts remain untouched.
An Indian government delegation will be visiting Washington D.C. Monday to seek clarity amid Trump’s insistence that “nothing changes” on the trade deal between the two countries.
Trump said in his interaction with the media after the judgement, “They (India) will be paying tariffs, and we will not be paying tariffs. The India deal is on. PM Modi is a great gentleman. India was ripping us off. So we made a deal, it’s a fair deal now.”
In his new Executive Order after the Supreme Court ruling, Trump has invoked Section 122 of the Trade Act, which authorises the President to impose up to 15 percent temporary import tariffs for up to 150 days, amid severe balance of payments issues, extendable only by Congress.
Trade expert Ajay Srivastava of Global Trade Research Initiative (GTRI) told The Economic Times that the ruling “prompts India to re-examine its trade deal as 55 percent of exports revert to MFN baselines, potentially unlocking refunds worth billions, but exposing vulnerabilities if Congress hikes barriers later”.
Globally, for all countries which made trade agreements with Washington before Friday’s judgement—at higher tariffs—the rate will be reset to 15 percent. These include the European Union (15 percent), Japan (15 percent), Switzerland (15 percent), Vietnam (20 percent), Pakistan (20 percent), and Bangladesh (19 percent).
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