 "How US court blocking Trump’s tariffs could be a boon to India")
On April 2, amid much pomp, Donald Trump unveiled his ‘reciprocal tariff’ strategy, terming it ‘Liberation Day’. Almost two months later, a US federal court has now blocked Trump’s sweeping tariffs, delivering a major blow to a key component of his economic policies.
A three-judge Court of International Trade ruled that the US president had overstepped his authority, barring most of the restrictions announced since he took office in January. The court’s ruling stated that Trump’s tariff orders “exceed any authority granted to the president … to regulate importation by means of tariffs”.
While the White House fumed, global markets cheered the court’s ruling with the US dollar surging against the euro, yen and Swiss franc. Countries too hailed the court’s decision with China urging Washington to “fully cancel the wrongful unilateral tariff measures”.
But will this have any effect on India? What about the trade deal that New Delhi is negotiating with Washington? We have the answers.
What was the court’s ruling on Trump’s tariffs?
A three-judge panel of the US Court of International Trade blocked Trump’s steepest tariffs on China and other US trading partners, stating that federal law did not grant him “unbounded authority” to tax imports from nearly every country around the world.
The judges ruled that the International Emergency Economic Powers Act (IEEPA), a 1977 law that Trump cited to justify the tariffs, does not give him the power to impose sweeping import taxes. Moreover, it blocked a separate set of levies that the Trump administration was imposing on China, Mexico, and Canada, for the unacceptable flow of fentanyl and illegal immigrants into the US.
The court’s ruling was the result of a lawsuit filed by the Liberty Justice Centre on behalf of several small businesses that import goods from countries targeted by the duties.
This means that all of Trump’s reciprocal tariffs he had imposed on countries ranging from 10 per cent to as high as 50 per cent have been blocked. It is not clear precisely when and how the tariff collections would grind to a halt. The ruling gives the executive branch up to 10 days to complete the bureaucratic process of ending them, reports The New York Times.
How has the White House reacted?
The Trump administration is unhappy over the court’s ruling. White House deputy press secretary Kush Desai said in a statement, “It is not for unelected judges to decide how to properly address a national emergency.
“President Trump pledged to put America First, and the administration is committed to using every lever of executive power to address this crisis and restore American greatness.”
Stephen Miller, the White House deputy chief of staff for policy, also hit out at the court with a social media post claiming “the judicial coup is out of control”.
Hours later, Trump too, took to his Truth Social account to comment on the matter. He shared a picture of himself with the words: “He’s on a mission from God & nothing can stop what is coming.”
Meanwhile, the Trump administration immediately filed its plans to appeal in the US Court of Appeals for the Federal Circuit.
Experts and Trump watchers note that the court’s strike down of the tariffs is a huge blow to the US president and his economic policy. Wendy Cutler, a former US trade official who is now vice president at the Asia Society Policy Institute, told the Associated Press that the court’s decision “throws the president’s trade policy into turmoil.”
“Partners negotiating hard during the 90-day day tariff pause period may be tempted to hold off making further concessions to the US until there is more legal clarity,” she said.
Others also agreed saying that the decision sets the stage for broader legal challenges to executive-led trade actions.
What will be the impact of the court’s ruling on India?
As Cutler noted the ruling will redefine trade dynamics — countries that were negotiating hard with the Trump administration would hold off or rethink their strategy.
Many note that this will have a positive impact on India and may benefit New Delhi in the ongoing trade deal negotiations. How, you ask?
The court’s ruling gives India and its officials some leeway in carrying out negotiations with Washington. Earlier, a sword of 26 per cent tariffs was hanging over India’s heads while negotiating with US. In fact, New Delhi had already implemented several duty cuts, including those on bourbon whiskey and motorbikes, during the Union Budget.
Then as Reuters said in a May 9 report that India offered to slash its tariff gap with the US to less than four per cent from the current nearly 13 per cent, in exchange for an exemption from President Donald Trump’s “current and potential” tariff hikes.
However, now that the court has blocked Trump’s tariffs, India can seek better market access for its goods in the current trade deal and could also recalibrate its stance on some issues. Motilal Oswal told the Economic Times, “A pullback in US tariff aggression creates space for India to strengthen trade positioning.”
For instance, Trump has been pushing India to provide better access for Big Tech companies. However, a report by the Standing Committee on Finance in India raised alarms regarding anti-competitive practices by major tech firms. It noted that Google Play, as the dominant platform for app downloads on Android, requires the use of its payment system for paid apps and in-app purchases. The Competition Commission of India (CCI) has observed that such practices could undermine competition by directing traffic towards Google’s app.
Additionally, Motilal Oswal has noted that exporters in sectors like pharma and textiles could benefit if the ruling weakens the US’ reliance on China-centric trade strategies. “Exporters in pharma, textiles, may benefit if global supply chains de-risk from China,” the brokerage told Economic Times, pointing to India as a natural beneficiary of any diversification shift.
With inputs from agencies
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