Fresh court setbacks to US President Donald Trump’s tariff measures have deepened uncertainty around Washington’s trade policy, prompting experts to caution India against rushing into a bilateral trade agreement (BTA) with the United States until a more stable and legally predictable framework emerges.
Experts said the repeated judicial pushback against Trump’s tariff regime also reinforces the importance of multilateral trade norms under the WTO framework.
In another blow to the White House, a US federal court struck down the 10 per cent global tariffs imposed by Trump, calling them “invalid” and “unauthorised by law”.
The tariffs had been imposed on all countries, including India, on February 24 for 150 days after an earlier US Supreme Court ruling invalidated Trump’s sweeping reciprocal tariffs.
“The continuing uncertainty around US tariff policy, with major Trump-era tariffs repeatedly struck down by courts, makes any long-term trade commitments by India difficult to justify,” think GTRI Founder Ajay Srivastava said.
He said India should wait until the US develops a more stable and legally reliable trade framework before finalising the Bilateral Trade Agreement.
“At present, the US is also not prepared to reduce its standard Most-Favoured-Nation (MFN) tariffs, while expecting India to lower or eliminate its MFN duties across most sectors. Under such conditions, any trade deal risks becoming one-sided, with India offering permanent market access concessions without receiving any meaningful tariff benefits in return,” Srivastava said.
Shishir Priyadarshi, President, Chintan Research Foundation and former Director at the WTO, said the ruling reaffirmed that Trump’s tariff measures violated global trade rules.
“However, with the decision held in abeyance, uncertainty lingers. We must remain vigilant, as the US may still seek new avenues to circumvent the ruling,” Priyadarshi said.
The United States Court of International Trade, in a 2-1 ruling on May 7, held that the Trump administration had exceeded powers granted by Congress under Section 122 of the Trade Act of 1974. The tariffs were struck down less than 50 days after being introduced on February 20.
According to GTRI, the ruling currently applies only to the parties involved in the case, including the state of Washington, spice importer Burlap & Barrel, and toy maker Basic Fun!.
“The tariffs will continue for other importers while the US government appeals the ruling. The court chose not to block the tariffs nationwide at this stage. The court limited relief to the litigants before it rather than issuing a nationwide injunction, a practice sometimes followed by US courts in politically sensitive disputes involving executive authority,” Srivastava said.
With both the reciprocal tariffs and the Section 122 tariffs now struck down, the US tariff regime is largely reverting to the pre-Trump structure based on WTO-compliant Most-Favoured-Nation tariff rates.
Section 122 allows the US president to impose import tariffs of up to 15 per cent for a maximum period of 150 days without congressional approval in cases involving serious balance-of-payments difficulties.
The Section 122 tariffs were imposed on February 20, 2026, just hours after the US Supreme Court invalidated Trump’s reciprocal tariffs.
On the legality of the Section 122 levies, Srivastava said the measures lacked strong legal grounding because the provision was originally designed to address severe balance-of-payments crises and persistent dollar outflows.
“However, since 1973 the United States has operated under a free-floating dollar system, where trade imbalances are adjusted through exchange rates and global capital flows rather than import restrictions. The U.S. continues to run large trade deficits while still attracting massive foreign investment because the dollar remains the world's dominant reserve currency,” he added.
Experts said the Trump administration is now expected to increasingly rely on targeted trade actions such as Section 301 investigations and Section 232 national security tariffs.
These measures could target sectors including steel, semiconductors, automobiles, pharmaceuticals and critical minerals.
“The legal uncertainty around US tariffs is also affecting trade negotiations. Malaysia has already walked away from its trade deal with the US, while several other countries are rethinking trade deals with the US,” Srivastava said.