Govt, India Inc. To Wait & Watch After US Court Blocks Trump Tariffs

After announcing sweeping universal reciprocal tariffs in April, the US decided to put them on hold for three months. The 90-day deadline ends on July 9.

“The sudden tariffs, which were imposed by defying all international trade laws, have naturally come as a jolt, and have increased global risks. Though the country’s court has given its ruling, we will continue with our negotiations on the trade deal and try to conclude at least the first part by next month,” a government official said on condition of anonymity.

Besides the universal reciprocal tariff, the Trump administration has separately announced sectoral tariffs on items such as steel, automobiles and auto components.

While earlier, Washington refused negotiations with India on the sectoral tariff plan, which was slated to be outside the umbrella of the BTA, it has now accepted India’s proposal to include it in the overall trade pact, something that has come as a big relief to the country’s steel and auto industries.

Earlier this month, Washington slashed tariffs on Chinese imports too, from 145 per cent to 30 per cent, while Beijing reduced the rates on American imports from 125 per cent to 10 per cent. The US economy shrank 0.3 per cent in the first quarter of this year, increasing pressure on the Trump administration.

Exporters And Other Industries Cautious  

“The decision to include the sectoral tariff in the overall trade negotiations was much needed, and will help protect domestic industries, including MSMEs,” said Pankaj Chadha, partner and CEO of Jyoti Steel Industries, and chairman of the Engineering Export Promotion Council (EEPC) to The Secretariat.

Earlier this month, Commerce and Industry Minister Piyush Goyal was in the US for the BTA negotiations.

Though the US court ruling has brought some cheer to India Inc., industry biggies are treading with caution. “It is too early to comment on the implications of the US court ruling. At present, the situation continues to be uncertain. But having said that, the order has come as a relief, even though both countries are set for a trade pact,” a promoter of a mid-sized exporting firm said.

After India and the UK signed a free trade agreement, which Prime Minister Keir Starmer called Britain’s biggest since Brexit, talks with the European Union are on course. In 2013, India-EU halted their FTA negotiations due to differences in the scope and expectations from the deal. 

Until 2012, almost all of India’s FTA signatories were to its east, namely the Association of Southeast Asian Nations (ASEAN) countries, along with Singapore, Japan, South Korea and Sri Lanka, noted Carnegie Endowment for International Peace.