US Court Blocks Reciprocal Tariffs; India can Go Slow On Trade Talks
The US Court of International Trade has ruled that Trump’s “Liberation Day” tariffs — which imposed a 10 per cent baseline duty on most imports and country-specific reciprocal tariffs on goods from 57 countries— were illegal.
Chennai: An US trade court has blocked President Donald Trump from imposing reciprocal tariffs on its trade partners and found that he ‘overstepped his authority’. The industry now wants the Indian government to go slow with the trade negotiations. After industrialist Elon Musk’s exit from the Trump administration, India can also rethink on lowering duties for imported US cars.
The US Court of International Trade has ruled that Trump’s “Liberation Day” tariffs — which imposed a 10 per cent baseline duty on most imports and country-specific reciprocal tariffs on goods from 57 countries— were illegal.
In cases filed by small businesses and 12 different states, the court challenged the tariffs imposed under International Emergency Economic Powers Act of 1977 (IEEPA), which grants him authority to regulate commerce in the light of threats that can constitute a national emergency.
The ruling may provide temporary relief for affected consumers and businesses—halting the 30 per cent tariff on China, 25 per cent tariff on certain goods from Mexico and Canada, and 10 per cent basic tariffs on all imported goods.
Trump, which has 10 days to put the injunction into effect, will appeal against the ruling. According to Goldman Sachs, the Trump administration will find other ways to impose tariffs.
Following the development, Indian industry wants the government to go slow on the trade treaty. “We should wait till the final court ruling comes. There is no point in negotiating with someone who does not have the power to levy tariffs,” said Pankaj Chadha, Chairman, Engineering Export Promotion Council.
“Not only do these Trump-era tariffs violate World Trade Organization (WTO) rules, but the US court also has now confirmed that they breach domestic law. With the Trump tariffs standing on shaky legal ground, India must pause and reassess its negotiation strategy before committing to an FTA that could disproportionately favour US interests,” said Ajay Srivastava, founder, GTRI.
The industry also feels that the US will not put pressure on removing duties on imported cars after Elon Musk exited the administration. “The duty exemption would have benefitted Tesla the most. However, if the India-UK treaty sets a template for automobile import, it will have to be followed in the treaties with the US as well as Europe,” said Chadha.
In the case of Musk’s satellite internet company Starlink, it is reportedly preparing to launch its services in India in the next 12 months. The company has already received a Letter of Intent from the Department of Telecommunications (DoT).