The US Supreme Court last Friday (Feb. 20) struck down, by a 6-3 verdict, a major part of Donald Trump’s tariff regime on imports into the US, ruling that the power to impose such levies belongs to Congress, not the President.
That would make Trump’s imposts, at differential rates for different countries, at once infructuous. However, the President, not one to be curbed by the rule of law, signed a new order levying a uniform 10% tariff — which he then said he would raise to 15% — on all countries under an alternative law.
For India, this means that the 15% tariff will put it on par with all other countries, including those that are our competitors in textiles, jewellery and industrial goods. This may look like good news compared to the 18% slapped on India under the ‘framework’ (announced unilaterally by the White House) for an interim Indo-US free trade deal that is supposedly being negotiated.
But that’s about all the good news there is. India stands as a net loser as a result of the trade deal shenanigans of the past three weeks and the US Supreme Court verdict last week. It has, in the bargain, agreed to open up its markets, including the highly vulnerable agriculture sector, to US imports with no tariff or non-tariff barriers and was coerced into scaling back on its purchases of discounted Russian oil, which comprised more than 30% of its petroleum imports.
A bit of spine might have helped India gain a little time until the US Supreme Court verdict.
Reacting to the tariff developments in Washington, India has said it will ‘study’ the situation.
This is a typical non-response, but rather a wise one considering the fluid emerging scenario. The US Supreme Court verdict has upended the trade deals the US has already struck with major partners such as the UK, the European Union, Japan and South Korea.
Some of them will have to pay a higher tariff than what they had agreed upon with the Trump administration. It’s not yet clear how those governments will respond.
Moreover, the 15% tariffs imposed by Trump after the Supreme Court verdict will be in effect for only 150 days, after which they will need to be ratified by the US Congress.
The court has said the President has the power to apply sanctions only in cases of an emergency with regard to specific countries, not across the board involving all countries. This circumscribes Trump’s room for manoeuvre, but the authoritarian President is sure to strain the leash.
That sets up a conflict between the President and America’s highest Constitutional body and potentially Congress as well in the months ahead.
With the US heading to mid-term elections in Congress in November this year, the situation is primed for an epic tussle as Trump and his white Christian nationalist supremacist regime try to complete their takeover of America, and liberal democratic forces try to recover their lost ground.
For New Delhi, this is a good time to be reticent, a talent it has in abundance. Tactically, it is best to drag one’s feet while Trump battles to establish his legitimacy.
News emerging on Sunday is that a bilateral meeting in Washington of Indian and US officials negotiating the interim trade deal has been postponed. It’s best to let the chips fall.