India has postponed talks to finalise the legal details of a framework trade agreement with the United States. These talks were scheduled to begin in Washington on Monday. It’s clear that Modi government in India wants the terms of trade between two countries to be determined in light of US Supreme Court’s ruling against President Donald Trump’s unilateral tariffs.
US Supreme Court had clarified just two days ago that Trump’s arbitrary tariffs on imported goods from various countries under the Constitution’s International Emergency Economic Powers Act were illegal and beyond president’s jurisdiction because he did not obtain the approval of US Parliament (Congress). Immediately following this decision, Trump invoked another article of US Constitution and announced a 10 percent tariff on all imported goods entering US for 150 days, or five months, and later increased it to 15 percent.
This tariff rate was set at 18 percent under the trade agreement with India, so now this rate will apply to goods exported from India. But the biggest question is what will be the status of the trade framework announced recently between India and United States in light of the Supreme Court’s decision? Some prominent economic experts in the country believe that this framework or trade model will now remain merely a “statement of purpose or will.” The declaration of this framework was signed by executive heads of both countries.
Global developments reveal that since Donald Trump assumed the presidency of the United States in January 2024, global politics has been undergoing significant turmoil. Trump’s policies during the past 2025 have triggered a global “economic war” that has led countries across the world to launch a campaign to protect their own economic interests.
This can certainly be termed an “economic cold war.” But the biggest change is that due to Trump’s policies, the global power structure has been disrupted, rendering the World Trade Organisation completely irrelevant.
The bilateral trade agreements Trump entered into with more than twenty of the world’s most economically powerful countries have completely eroded the fair trade balance established within WTO between developed and developing countries. Therefore, in this environment, US Supreme Court’s decision against America’s unilateral tariff policy is a panacea for developing countries. While India has now become the world’s fourth-largest economy, it remains a developing country because more than 80 percent of its citizens remain significantly underprivileged compared to those in developed countries.
Therefore, India must consider how to maximise its own benefits from the new environment created by the decision. In this context, the trade agreement India recently signed with 27 European Union countries can serve as an example. Under this agreement, India has secured a zero percent duty exemption on Indian goods exported to European countries that require Indian labour and skills for production. Therefore, India can strive to protect its labour-intensive industries by setting trade terms with the United States.
In the agreement with the European Union, India has also fully protected its agricultural sector. Furthermore, India may attempt to impose tariffs on imported goods from the United States in a manner that does not impact the productivity of manufacturing units established in such sectors in India. However, India must also consider the purchasing power of its people and provide relief to consumers. Therefore, it cannot blindly impose restrictions on American imports. Especially in the fields of high technology and defence technology, it must give the United States its due place.
We must also understand that when trade agreements are reached between two countries, they also impact global strategic matters. Therefore, India’s historically cordial relationship with Russia should not be affected in any way. However, another impact of the US Supreme Court’s decision could be that a multi-polar balance of power begins to flow in the world, as until now, the US and European countries have dominated various international organisations, whereas the formation of organisations like BRICS (Brazil, Russia, India, China, and South Africa) had begun to shift global trade dynamics.
However, Mr. Trump, through his tariff policy, attempted to tilt the overall trade balance in America’s favour. This is why countries around the world began to view his policy as contrary to the principle of uniform global development and were concerned, as this was the objective of the United Nations, formed after World War II.
