What Does the US Supreme Court's Ruling Mean for India's Trade Deal with the US?

India Monitors US Tariff Developments

New Delhi: On Friday, Commerce Minister Piyush Goyal stated that India is closely observing the implications of the US Supreme Court's recent ruling regarding tariffs. He emphasized that the joint statement concerning the proposed interim trade agreement allows for adjustments to the deal if necessary.

Goyal's comments followed US President Donald Trump's announcement of a 10 percent tariff on all trading partners, which is set to last for 150 days. This temporary tariff was enacted on February 24, after the Supreme Court invalidated Trump's earlier decision to impose reciprocal tariffs on imports.

Additionally, Trump indicated plans to raise tariffs to 15 percent on the same day.

"We need to keep an eye on the situation. You may have seen my joint statement with the US, which clearly mentions that if circumstances change, the agreement can be rebalanced to maintain fairness for both parties," Goyal remarked when questioned about potential shifts in India's negotiation stance post-verdict.

A joint statement released on February 7 highlighted that if either country alters its agreed-upon tariffs, both nations consent to modify their commitments accordingly.

Goyal reiterated, "This ensures that the integrity of the agreement is mutual."

The minister made these statements during a media event in New Delhi.

On February 7, the two nations revealed that they had finalized the initial framework for their bilateral trade agreement.

As part of this pact, the US committed to reducing reciprocal tariffs on Indian goods from 25 percent to 18 percent. Furthermore, the US lifted the 25 percent punitive tariffs previously imposed on India for acquiring Russian crude oil.

Both countries also agreed to lower import duties on various products. India pledged to eliminate or reduce tariffs on all US industrial goods and a broad array of US food and agricultural items, including tree nuts, fresh and processed fruits, soybean oil, wine, and spirits.

According to the agreement, India aims to purchase USD 500 billion worth of US energy products, aircraft and parts, precious metals, technology items, and coking coal over the next five years.

Although chief negotiators from both nations were scheduled to meet this week in Washington to finalize the legal text of the deal, the meeting was postponed following the Supreme Court's ruling on Trump's tariffs.

On February 20, the court invalidated Trump's extensive global tariffs.

"This is a developing situation. We need to observe closely. The Trump administration has made various statements... They have several other mechanisms available to impose new tariffs. They have already utilized one, Section 122, to implement a 10 percent tariff. They have indicated that they may increase it to 15 percent next week for the initial 150 days," Goyal noted.

When asked if the tariff changes present advantages for India, the minister responded that it offers domestic companies the chance to continue exporting without obstacles.

"However, keep in mind that the deal was more favorable because it included numerous other components... Until we finalize it, I cannot disclose every detail. Although all sensitive issues have been addressed, I assure you there are many more benefits to the deal that we should await. Let's see how the situation evolves," he added.

He also mentioned that all sensitive sectors, including dairy, soy meal, poultry, GM food, rice, wheat, and corn, are fully safeguarded.

"Remember, trade agreements and international commerce revolve around comparative advantages... A trade deal is not solely about tariff rates; it is more about the competitive edge you gain over your rivals. At a 50 percent tariff, we faced significant disadvantages in our exports," he concluded.