That may not be all good news.
The US President had swiftly turned to a temporary route to impose 10% global tariffs after the US top court, in February, struck down the much higher tariffs under the 1977 International Emergency Economic Powers Act (IEEPA).
The new tariffs, invoked under Section 122 of the US Trade Act of 1974, were set to expire within 150 days — that is, on July 24.
That is the time when the US was expected to announce its new tariff framework, with bigger penalties for countries.
Now, the Court of International Trade’s (CIT) finding that Trump’s Section 122 tariffs, too, were illegal could prompt the US to move up the introduction of its new tariff plans, before July 24. Here’s what to know.
Why the US court’s order may not bring much relief
Deborah Elms, Head of Trade Policy at the Hinrich Foundation in Singapore, said in a social media post that the CIT’s order may not provide significant relief because it does not nullify tariffs for the plaintiffs.
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“The statute [Section 122] was only intended to be used until July. In fact, the world will likely face higher tariffs even sooner, as the Trump team is likely to respond by pushing forward application of Section 301 and new or expanded Section 232 cases,” Elms said.
US Treasury Secretary Scott Bessent had said last month that President Donald Trump’s tariffs may be restored by July to the levels in place before the Supreme Court struck down IEEPA tariffs. “We had a setback at the Supreme Court in terms of the tariff policy, but we will be implementing or conducting Section 301 studies, so the tariffs could be back in place at the previous level by the beginning of July,” Bessent said, according to Bloomberg.
The impact on India
This could have an impact on India, as New Delhi has agreed to a trade deal but has yet to sign an agreement. Last month, an Indian delegation visited Washington for another round of talks.
India was one of the countries hit hardest by Trump’s trade war. The US, beginning August last year, imposed 50% tariffs on India, hurting exports and Foreign Direct Investment (FDI) in the country.
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Now, goods exports have taken an additional hit owing to the ongoing tensions in West Asia. Exporters, however, have said that shipments to the US have begun recovering since March.
Section 122 tariffs
Trade experts said that the Section 122 tariffs were on a weak legal footing because the law was originally enacted to deal with serious balance-of-payments crises and persistent dollar outflows.
However, since 1973, the US has operated under a free-floating dollar system, where trade imbalances are adjusted through exchange rates and global capital flows rather than import restrictions.
The US continues to run large trade deficits while still attracting massive foreign investment because the dollar remains the world’s dominant reserve currency.
The way ahead for India
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Former trade officer and founder of think tank Global Trade Research Initiative (GTRI), Ajay Srivastava, said that India should wait until the US develops a more stable and legally reliable trade system before concluding the Bilateral Trade Agreement.
The continuing uncertainty around US tariff policy, with major Trump-era tariffs repeatedly struck down by courts, makes any long-term trade commitments by India difficult to justify, he said.
“At present, the US is also not prepared to reduce its standard Most-Favoured-Nation (MFN) tariffs, while expecting India to lower or eliminate its MFN duties across most sectors. Under such conditions, any trade deal risks becoming one-sided, with India offering permanent market access concessions without receiving any meaningful tariff benefits in return,” Srivastava said.
The US has launched two Section 301 investigations against India, alleging “structural excess capacity” and “forced labour”.
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India, in response to the probe last month, said that its merchandise export-to-GDP ratio of around 12% reflects a largely domestic demand-driven economy and that its legal framework aligns with the forced labour standards of the International Labour Organisation.
The USTR had argued that structural excess capacity and production in manufacturing sectors present a serious challenge to America’s efforts to re-shore supply chains and provide good-paying jobs for American workers, and that key trading partners have developed production capacity untethered from the incentives of domestic and global demand.