Trump’s tariff tantrums may leave India exposed to a ‘one-sided’ trade deal: GTRI
The warning comes after the United States Court of International Trade struck down Trump’s 10% global tariffs under Section 122 of the 1974 Trade Act, dealing another blow to the administration’s aggressive tariff strategy. The ruling, issued by a 2-1 decision on May 7, came less than 50 days after the tariffs went into effect on February 20.
Also read: India and US ‘very close’ to trade deal, need to clear final hurdle
The decision marks the second major legal setback to Trump-era trade measures, after the U.S. Supreme Court previously invalidated the administration’s reciprocal tariffs, according to GTRI. Together, the decisions push the United States back toward the traditional Most Favored Nation (MFN) tariff structure linked to the World Trade Organization.
“Continued uncertainty about US tariff policy, with major Trump-era tariffs repeatedly struck down by the courts, makes it difficult to justify India’s long-term trade commitments,” the report said.
An unpredictable trading halt
GTRI argued that Washington’s trade posture has become increasingly unpredictable as the administration moves from one legal mechanism to another to maintain broad tariff powers. The think tank described it as a “cat-and-mouse game” in which the White House invoked one law to impose tariffs, but reverted to another after intervention from the courts.
The latest decision focused on Section 122 of the Trade Act of 1974, which allows the U.S. president to impose tariffs of up to 15% for 150 days without Congressional approval during severe balance of payments crises.
However, the commercial court ruled that the administration had exceeded the authority granted under the law, stating that Article 122 was designed to address urgent balance of payments situations rather than serve as a means of reducing trade deficits through comprehensive tariffs. GTRI said the legal basis for the tariffs was weak from the beginning because the United States has operated under a free-floating dollar system since 1973. In such a system, trade imbalances are often adjusted through foreign exchange movements and capital flows rather than import restrictions.
“The United States continues to attract large amounts of foreign investment while running large trade deficits because the dollar remains the world’s dominant reserve currency,” the report said.
The court’s decision currently applies only to the plaintiffs in the case (Washington state, spice importer Burlap & Barrel, and toy company Basic Fun); That means the tariffs will remain in effect for other importers while the administration continues its appeal with the U.S. Court of Appeals for the Federal Circuit.
Also read: US trade court rules Trump’s 10% global tariffs illegal, but orders narrow blockage
Still, repeated judicial decisions are beginning to reshape global trade calculations, GTRI said.
“Such an uncertain tariff regime in the world’s largest market creates uncertainty for businesses, disrupts global supply chains and increases costs for producers and consumers,” the statement said.
The think tank also warned that the Trump administration may now intensify its use of more targeted trade tools, such as Section 301 investigations and Section 232 national security tariffs on sectors such as steel, semiconductors, autos, pharmaceuticals and critical minerals.
GTRI stated that legal uncertainty is currently affecting trade negotiations, pointing out that Malaysia has decided to withdraw from the trade agreement with the United States, while other countries are re-evaluating relations with Washington.
What India has to lose
For India, the concern is more structural. GTRI argued that the US is currently reluctant to reduce its own MFN tariffs, while also pressuring India to reduce or eliminate tariffs on multiple sectors under the proposed bilateral trade deal.
“Under these circumstances, there is a risk that any trade agreement would be one-sided, with India offering permanent market access concessions without receiving any meaningful tariff benefits in return,” the report said.
Ajay Srivastava, founder of GTRI, said India should wait for the US to develop a more stable and legally sound trade framework before signing any major trade deal with Washington.
