India-US Trade Deal Stalls After Supreme Court Tariff Ruling
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- USTR Jamieson Greer traveled to New Delhi about two weeks ago with both governments claiming the BTA was 99 percent finalized, but India unexpectedly walked back from the deal immediately afterward.
- Commerce Minister Piyush Goyal conditioned any BTA signing on India receiving "some competitive advantage over what is being given to countries like Vietnam, Thailand, the Philippines, Indonesia, Malaysia, China, Bangladesh, Sri Lanka, and other neighboring countries."
- The February framework had India eliminating or reducing tariffs on all U.S. industrial goods and many agricultural products while the U.S. secured an 18 percent reciprocal tariff rate on Indian goods, plus India agreed to halt Russian oil imports in exchange for dropping Trump's August 2025 25 percent duty.
- The U.S. Supreme Court ruled Trump lacked authority to impose "reciprocal tariffs" under the International Emergency Economic Powers Act (IEEPA), voiding duties on 57 countries and forcing both governments back to the negotiating table.
- Within weeks of that ruling, the Trump administration opened two Section 301 investigations — one targeting 60 partners including India over forced labor, and another targeting 16 countries across 22 sectors, with 7 Indian sectors including construction goods exposed to new duties.
- The original fall 2025 deadline for the BTA's first tranche was missed despite the "Mission 500" initiative launched in early 2025 to double bilateral trade to $500 billion by 2030.
- The Section 301 probe duty rates have not yet been specified, meaning India cannot guarantee its exporters won't face new levies even after conceding on tariffs and Russian oil in the February framework.
Why it matters: India now faces a trap: it already conceded tariffs on all U.S. industrial goods plus agricultural products and agreed to drop Russian oil imports, yet the U.S. retains unilateral Section 301 authority to impose duties on at least 7 Indian sectors — including broad categories like construction goods — on top of the 18 percent reciprocal rate. Goyal's stated precondition (parity with Vietnam, Thailand, China, Bangladesh, and other Asian neighbors) reframes the sticking point from agriculture to relative competitive positioning, which Washington under its America First doctrine has no structural reason to grant.
