The story so far:
February was an eventful month for India-U.S. trade relations. The two countries announced an impending interim agreement on trade, the U.S. Supreme Court overturned President Donald Trump’s tariffs, the Indian negotiating team indefinitely postponed its visit to Washington, and Commerce Minister Piyush Goyal hosted U.S. Commerce Secretary Howard Lutnick in New Delhi. All of this has raised the question: what happens to the trade deal and U.S. tariffs?
EXPLAINED | How is U.S.-India trade deal being tweaked?
What did the U.S. Supreme Court say?
Mr. Trump implemented most of his tariffs on other countries, including on India, using the International Emergency Economic Powers Act of 1977. The U.S. Supreme Court on February 20 struck down the tariffs implemented under this law. It said that the U.S. President would need congressional approval before levying tariffs under these laws. For most countries, this involved the removal of the ‘reciprocal tariffs’ Mr. Trump had imposed on them since mid-2025. Mr. Trump had on February 6 removed the 25% penal tariffs he had imposed on India for its import of Russian oil. This had brought India’s total tariff down from 50% to 25%. As per the joint statement issued by the two countries, the remaining 25% reciprocal tariffs would be reduced to 18% under the interim agreement. However, before this could be done by the U.S., its Supreme Court struck down the tariffs.
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What was Trump administration’s reaction?
Mr. Trump lashed out at the Supreme Court in several social media posts and speeches. Also expectedly, he resorted to other laws under which he could impose tariffs on other countries. As of now, this stands at a flat 10% tariff on all imports for a period of 150 days starting January 24. However, Mr. Trump has said he will raise this to the maximum permissible limit of 15%. That has not happened yet. Several other tariffs that the U.S. has imposed over the last year or so remain in place. These include a 50% tariff on aluminium and steel imports, and country-specific tariffs on items valued at less than $800. Both continue to impact India since steel and aluminium form a substantial portion of India’s exports to the U.S., and India’s MSMEs used to leverage e-commerce platforms and avail of the tariff exemption on items below $800.
The U.S. on February 24 imposed a 126% tariff on the import of solar modules from India after a ‘preliminary’ finding that subsidised exports from India were hurting U.S. solar firms.
Also Read | New U.S. tariffs take effect after Supreme Court ruling
What about the impact on other trade deals?
The European Union, which has already signed a trade deal with the U.S., was very vocal about what it expected following the Supreme Court judgment. “The European Commission requests full clarity on the steps the U.S. intends to take following the recent Supreme Court ruling on the International Emergency Economic Powers Act (IEEPA),” the Commission said in a statement. “The current situation is not conducive to delivering ‘fair, balanced, and mutually beneficial’ transatlantic trade and investment, as agreed to by both sides and spelled out in the EU-U.S. Joint Statement of August 2025.” Japanese officials, too, were vocal about the deal, saying that since Japan’s deal with the U.S. focussed on automobile tariffs that were not affected by the Supreme Court judgment, they were not keen to revisit the deal.
The Australian trade minister said that the U.S. must honour the free trade agreement signed between the two countries and allow duty-free imports of Australian goods into the U.S., since Australia was holding up its end by allowing duty-free imports of U.S. goods.
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How has India reacted?
In various interviews and press conferences, Mr. Goyal had said the interim agreement was set to be formally signed by the middle of March, and could be implemented by early April. These statements, however, were made before the Supreme Court’s ruling. In response to the ruling, the Ministry of Commerce and Industry issued a relatively anodyne statement compared to statements made by other countries and groupings. “We have noted the U.S. Supreme Court judgment on tariffs yesterday,” the statement said, adding, “President Trump has also addressed a press conference in that regard. Some steps have been announced by the U.S. Administration. We are studying all these developments for their implications.”
The Indian team was meant to be in Washington on February 23-25 to finalise the contours of the interim agreement so that it could be signed in mid-March. While not mentioning the deal in the official statement, sources in India’s Ministry of Commerce and Industry said that “the two sides are of the view that the proposed visit of the Indian chief negotiator and the team be scheduled after each side has had the time to evaluate the latest developments and its implications”. In other words, the visit to the U.S. was postponed indefinitely. However, on the other hand, Mr. Goyal hosted both Mr. Lutnick and U.S. Ambassador to India Sergio Gor in New Delhi on February 26 for what turned out to be a “fruitful” meeting, in Mr. Goyal’s words. A new date for an official meeting of negotiators is yet to be announced.
At the moment, a deal is more important to the U.S. than India because India can reduce its tariffs on U.S. goods only once a deal is signed. At the same time, the U.S. tariff threat that had been looming over issues like Russian oil and buying more U.S. goods has been removed for the time being.
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Has the U.S. changed its stance?
Regarding trade deals, the Trump Administration has been clear: nothing changes. Mr. Trump warned countries that he had signed deals with to honour them and not “play games”, or risk facing higher tariffs. “Any Country that wants to ‘play games’ with the ridiculous supreme court decision, especially those that have ‘Ripped Off’ the U.S.A. for years, and even decades, will be met with a much higher Tariff, and worse, than that which they just recently agreed to [sic],” he said in a post on Truth Social. He followed this up with: “As President, I do not have to go back to Congress to get approval of Tariffs. It has already been gotten, in many forms, a long time ago! They were also just reaffirmed by the ridiculous and poorly crafted supreme court decision!”
Mr. Lutnick, too, spoke about how nothing has changed from the U.S. point of view and that it expects other countries to honour their commitments. “I’ve been telling them [the U.S.’ trade partners] for a year whether we won or lost, we were going to have tariffs,” Mr. Lutnick said in a TV interview. “The President’s policy was going to continue. That’s why they signed these deals, even while the litigation was pending… We want them to understand that these deals are going to be good deals. We expect to stand by them. We expect our partners to stand by them.”
Published – March 01, 2026 02:00 am IST
