Paper: GS – II, Subject: International Relations, Topic: India’s relations with major powers, Issue: Impact of U.S.-tariffs on India.
Context:
The U.S. imposed tariffs of around 10–135% citing a “national emergency” due to trade deficits. India, though not the primary target, was indirectly impacted and now faces pressure to negotiate a trade deal.
Key Highlights:
Nature of U.S.-Tariffs:
- Over 100 countries were affected by U.S.-tariffs.
- Tariffs extended even to non-trade areas (e.g., Arctic marine reserves), showcasing executive overreach.
- Tariffs contradicted WTO norms and rules-based trade systems.
Legal challenge to tariffs:
- Judicial challenge: U.S. Court of International Trade (CIT) ruled (May 2025) that tariffs-exceeded executive authority.
- It stated that Invoking “national emergency” cannot override constitutional separation of powers. Executive cannot unilaterally rewrite international trade commitments.
- Executive Overreach in U.S.: Trump’s actions bypassed Congress and judiciary. Proposed laws like One Big Beautiful Bill (OBBB) would allow immunity from judicial review.
- Global Rule of Law at Risk: Tariffs-undermine the credibility of trade agreements. It reduces predictability and fairness in global trade.
Implications for India:
India’s Trade Position with U.S.:
- India enjoys a $35–40 billion trade surplus with the U.S.
- Tariffs affect key Indian export sectors such as wine, plastic, circuits, fishing, etc.
Strategic Concerns:
- India is at the risk of being forced into a one-sided trade deal under U.S. pressure.
- U.S. may use tariff threats as leverage. Any agreement must protect India’s export base and investments, especially from firms like Apple.
Economic Risks:
- Proposed BOBB tariffs of 3.5% on remittances may impact Indian diaspora.
- U.S. could target services, especially IT and H-1B visa-linked industries.
- Export duties, subsidies, and tech transfers may come under scrutiny.
Way ahead for India:
Conclusion:
“India should stay out of any trade deal that undermines its national interest.” India must protect its economic and diplomatic autonomy, resist coercive trade practices, and only engage in agreements that benefit its long-term interests.
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