Following the US Supreme Court ruling late last week, an Indian delegation postponed its scheduled trip to Washington.
India now has more room to negotiate a trade deal with the United States after the US Supreme Court ruled that Donald Trump’s tariffs were illegal. The US Supreme Court’s move to invalidate President Donald Trump’s emergency tariffs has created additional room for India in ongoing trade negotiations, people familiar with the discussions told Bloomberg.
In response to the ruling, Trump announced a 10% global tariff, which he later raised to 15%.The two countries agreed last February to reduce US customs duties on Indian exports to 18% from 50%. In return, India expressed its intention to buy $500 billion worth of American goods over five years.
India-US trade deal: Is there more room for negotiation?
Following the court’s ruling late last week, an Indian delegation postponed a planned trip to Washington that was intended to finalize the interim trade agreement.
However, Bloomberg reported that India is not considering any withdrawal from the bilateral trade arrangements reached with Washington earlier this month. The two sides were due to formalize the initial phase of their agreement next month, while continuing discussions towards a broader bilateral trade agreement.According to people familiar with the discussions, India is expected to push for provisions that protect against similar judicial setbacks in the future.
One source indicated that the decision significantly weakened Trump’s negotiating leverage.Although India has reduced its imports of Russian oil in recent months – a key demand from Trump – it has continued to emphasize that decisions on purchasing crude oil will be guided by domestic energy requirements and prevailing market dynamics.Madhavi Arora, an economist at Emkay Global Financial Services Limited, said that India may now reconsider elements of its trade understanding with the United States, especially since the risk of punitive tariffs associated with Russian oil imports has passed.But she added that India could still choose to gradually reduce such purchases to maintain relations with Trump. Arora noted that reduced pressure could allow India to push for better terms without making major concessions.In the wake of the ruling, India is acting cautiously, seeking to protect its trade interests while minimizing potential tensions with the Trump administration, which has stressed the importance of adhering to the agreements signed.
Despite being one of the first countries to begin trade discussions with Washington, India ultimately faced some of the harshest tariff rates, even after multiple rounds of negotiations and exchanges between leaders previously seen as close allies.Interestingly, when Donald Trump was asked about the impact of the ruling on the India-US trade deal, he said: “Nothing has changed, they will pay the tariffs, we will not pay the tariffs.
So, the agreement with India is that they pay customs duties. This is a reversal of what was before. I think Prime Minister Modi is a great man, a great man actually, but he was much smarter than the people he was against in terms of the United States.
He was stealing from us, India. So we made a deal with India, which is a fair deal now, and we don’t pay them tariffs and they pay the tariffs. “We did a little flip.”
India and China benefit from US Security Council ruling
China, India and Brazil are among the countries poised to benefit from reduced tariffs on exports to the United States after the Supreme Court ruled that Donald Trump’s reliance on the International Emergency Economic Powers Act to impose tariffs was illegal. Although Trump later proposed a uniform global tariff of 15%, Bloomberg Economics estimated that this would translate into an average effective rate of about 12% – the lowest level since the “Liberation Day” tariffs were imposed in April.Jayant Dasgupta, India’s former ambassador to the World Trade Organization, said India must remain engaged with Washington to better understand its intentions and any potential policy moves, and maintain an open dialogue. Speaking to Bloomberg TV’s Haslinda Amin, he noted that the direction of future developments remains uncertain.Finance Minister Nirmala Sitharaman said it was too early to provide detailed comments on the US Supreme Court’s decision, adding that the Commerce Department was currently assessing the ramifications.
