For India, it is status quo as of now. A 10% tariff imposed on all countries provides somewhat of a level playing field to India, too. But the key question is what happens to the countries with which the US has signed a trade deal. 

Fine Print Unclear

Trump said that there would be no change in the framework of the India-US interim trade agreement. 

As part of the India-US interim agreement, the effective reciprocal tariff for India would be 18%.

Will this mean India, if it signs the interim trade deal, will have to face an effective tariff of 18%? Policymakers and trade negotiators are still trying to decode.  

“We will have to wait and watch. We should not rush into signing the trade deal. It is better to analyse what the tariff situation is for countries with which the US already has a trade pact,” Pankaj Chadha, Partner and CEO, Jyoti Steel Industries, and Chairman, Engineering Export Promotion Council (EEPC) told The Secretariat. 

Following the Supreme Court ruling, Trump posted on Truth Social: “It is my Great Honor to have just signed, from the Oval Office, a Global 10% Tariff on all Countries, which will be effective almost immediately.”

Trump And Tariffs

Trade analysts and exporters fear that, despite the court ruling, the Trump administration could levy tariffs under Section 301 of the US Trade Act of 1974 or Section 232 of the Trade Expansion Act of 1962. If the US Trade Representative (USTR) finds “unfair” trade practices being followed by American trading partners, it is free to slap tariffs under Section 301. Similarly, under Section 232, the US can set tariffs or quotas on imports that it considers a threat to national security. 

Several countries, including India and China, have been slapped with such punitive actions in the past.

The US has already said that it will initiate investigations under Section 301, and this may result in additional tariffs in the near future.

“It would need to be seen how President Trump could still use other laws like Section 232 to enhance/keep tariffs for covered products outside of this decision, Trump and IEEPA,” Krishan Arora, Partner and Indirect Tax and India Investment Roadmap Leader, Grant Thornton Bharat, said.  

International Emergency Economic Powers Act

The US Supreme Court said that, despite the International Emergency Economic Powers Act (IEEPA) being in place, no American ever used it to impose tariffs. 

The IEEPA, which was enacted in 1977, allows the US President to channelise global commerce and transactions only in case of "unusual and extraordinary" foreign threat leading to a national emergency. Besides the imposition of sanctions, the Act also allows the US President to freeze assets and limit trade. 

India must tread carefully. “It is better to weigh all pros and cons before inking the deal; once signed, there will be little flexibility,” Chadha said. 

However, sources said that New Delhi would continue the dialogue and negotiations with Washington to finalise the bilateral interim trade deal.